Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 25, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | EPIQ SYSTEMS INC | ||
Entity Central Index Key | 1,027,207 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 562 | ||
Entity Common Stock, Shares Outstanding | 37,672,402 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 27,620 | $ 54,226 |
Trade accounts receivable, net | 140,597 | 117,854 |
Prepaid expenses | 20,206 | 12,934 |
Income taxes receivable | 8,421 | 9,437 |
Other current assets | 199 | 71 |
Total current assets | 197,043 | 194,522 |
Long-term Assets: | ||
Property and equipment, net | 77,715 | 70,579 |
Internally developed software, net | 15,971 | 14,713 |
Goodwill | 477,479 | 404,187 |
Other intangible assets, net | 44,943 | 29,605 |
Other long-term assets | 10,746 | 14,318 |
Total long-term assets | 626,854 | 533,402 |
Total Assets | 823,897 | 727,924 |
Current Liabilities: | ||
Accounts payable | 28,704 | 18,548 |
Current maturities of long-term obligations | 12,213 | 10,959 |
Accrued compensation | 23,977 | 18,673 |
Client deposits | 3,593 | 2,534 |
Deferred revenue | 3,669 | 2,276 |
Dividends payable | 3,599 | 3,376 |
Other accrued expenses | 9,144 | 7,988 |
Total current liabilities | 84,899 | 64,354 |
Long-term Liabilities: | ||
Deferred income taxes | 47,036 | 30,025 |
Other long-term liabilities | 12,476 | 11,789 |
Long-term obligations | 371,365 | 296,819 |
Total long-term liabilities | $ 430,877 | $ 338,633 |
Commitments and contingencies | ||
Equity: | ||
Preferred stock-$1 par value; 2,000,000 shares authorized; none issued and outstanding | ||
Common stock - $0.01 par value; authorized 100,000,000 shares; issued and outstanding December 31, 2015 - 40,835,651 and 37,534,447 shares, respectively; issued and outstanding December 31, 2014 - 40,835,651 and 36,680,469 shares, respectively | $ 408 | $ 408 |
Additional paid-in capital | 296,324 | 294,054 |
Accumulated other comprehensive loss | (7,949) | (4,362) |
Retained earnings | 62,991 | 88,391 |
Treasury stock, at cost - 3,301,204 shares and 4,155,182 shares, respectively | (43,653) | (53,554) |
Total equity | 308,121 | 324,937 |
Total Liabilities and Equity | $ 823,897 | $ 727,924 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 40,835,651 | 40,835,651 |
Common stock, shares outstanding | 37,534,447 | 36,680,469 |
Treasury stock, shares | 3,301,204 | 4,155,182 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue: | |||
Operating revenue | $ 505,936 | $ 444,118 | $ 438,690 |
Reimbursable expenses | 38,269 | 30,352 | 43,393 |
Total revenue | 544,205 | 474,470 | 482,083 |
Operating Expense: | |||
Direct cost of operating revenue (exclusive of depreciation and amortization shown separately below) | 248,158 | 216,317 | 210,458 |
Reimbursable expenses | 36,192 | 29,592 | 41,766 |
Selling, general and administrative expense | 170,352 | 167,041 | 149,045 |
Depreciation and software and leasehold amortization | 37,810 | 36,042 | 30,971 |
Amortization of identifiable intangible assets | 18,347 | 12,655 | 18,834 |
Impairment of goodwill and identifiable intangible assets | 1,162 | ||
Fair value adjustment to contingent consideration | (1,182) | 1,142 | 2,580 |
Other operating income (expense) | 5,291 | 880 | (791) |
Total operating expense | 516,130 | 463,669 | 452,863 |
Operating income | 28,075 | 10,801 | 29,220 |
Interest expense (income): | |||
Interest expense | 20,445 | 16,674 | 12,130 |
Interest income | (32) | (21) | (15) |
Net Interest Expense | 20,413 | 16,653 | 12,115 |
Income (loss) before income taxes | 7,662 | (5,852) | 17,105 |
Provision for (benefit from) income taxes | 19,600 | (4,515) | 5,995 |
Net income (loss) | $ (11,938) | $ (1,337) | $ 11,110 |
Net income (loss) per common share: | |||
Basic (in dollars per share) | $ (0.33) | $ (0.04) | $ 0.31 |
Diluted (in dollars per share) | $ (0.33) | $ (0.04) | $ 0.30 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 36,584 | 35,512 | 35,434 |
Diluted (in shares) | 36,584 | 35,512 | 36,302 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ (11,938) | $ (1,337) | $ 11,110 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustment, net of $0 tax in all periods | (2,209) | (2,411) | 891 |
Unrealized losses on interest rate cash flow hedges, net of tax benefit of $0, $1,067, and $0, respectively | (1,378) | (1,410) | |
Comprehensive income (loss) | $ (15,525) | $ (5,158) | $ 12,001 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Foreign currency translation adjustment, net of tax | $ 0 | $ 0 | $ 0 |
Unrealized losses on interest rate cash flow hedges, tax benefit | $ 0 | $ 1,067 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | [1] | Retained Earnings | Treasury Stock | Total |
Balance at Dec. 31, 2012 | $ 399 | $ 291,065 | $ (1,432) | $ 104,445 | $ (51,107) | $ 343,370 | |
Balance (in shares) at Dec. 31, 2012 | 39,924 | (4,001) | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 11,110 | 11,110 | |||||
Other comprehensive income (loss) | 891 | 891 | |||||
Excess tax benefit from share-based compensation | 2,828 | 2,828 | |||||
Restricted common stock issued under share-based compensation plans | $ 4 | (2,020) | $ 2,020 | 4 | |||
Restricted common stock issued under share-based compensation plans (in shares) | 375 | 153 | |||||
Stock option exercises | (7,466) | $ 10,467 | 3,001 | ||||
Stock option exercises (in shares) | 780 | ||||||
Common stock repurchased under share-based compensation plans | $ (6,515) | (6,515) | |||||
Common stock repurchased under share-based compensation plans (in shares) | (471) | ||||||
Share repurchases | $ (22,881) | (22,881) | |||||
Share repurchases (Note 7) (in shares) | (1,768) | ||||||
Dividends declared ($0.36 per share) | (12,801) | (12,801) | |||||
Share-based compensation expense | 7,007 | 7,007 | |||||
Balance at Dec. 31, 2013 | $ 403 | 291,414 | (541) | 102,754 | $ (68,016) | 326,014 | |
Balance (in shares) at Dec. 31, 2013 | 40,299 | (5,307) | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | (1,337) | (1,337) | |||||
Other comprehensive income (loss) | (3,821) | (3,821) | |||||
Excess tax deficiency from share-based compensation | (966) | (966) | |||||
Restricted common stock issued under share-based compensation plans | $ 5 | (1,478) | $ 4,479 | 3,006 | |||
Restricted common stock issued under share-based compensation plans (in shares) | 537 | 347 | |||||
Stock option exercises | (1,467) | $ 13,965 | 12,498 | ||||
Stock option exercises (in shares) | 1,081 | ||||||
Common stock repurchased under share-based compensation plans | $ (3,982) | (3,982) | |||||
Common stock repurchased under share-based compensation plans (in shares) | (276) | ||||||
Dividends declared ($0.36 per share) | (13,026) | (13,026) | |||||
Share-based compensation expense | 6,551 | 6,551 | |||||
Balance at Dec. 31, 2014 | $ 408 | 294,054 | (4,362) | 88,391 | $ (53,554) | 324,937 | |
Balance (in shares) at Dec. 31, 2014 | 40,836 | (4,155) | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | (11,938) | (11,938) | |||||
Other comprehensive income (loss) | (3,587) | (3,587) | |||||
Excess tax benefit from share-based compensation | 174 | 174 | |||||
Restricted common stock issued under share-based compensation plans | (4,631) | $ 10,011 | 5,380 | ||||
Restricted common stock issued under share-based compensation plans (in shares) | 776 | ||||||
Stock option exercises | (187) | $ 4,073 | 3,886 | ||||
Stock option exercises (in shares) | 308 | ||||||
Common stock repurchased under share-based compensation plans | $ (4,183) | (4,183) | |||||
Common stock repurchased under share-based compensation plans (in shares) | (230) | ||||||
Dividends declared ($0.36 per share) | (13,462) | (13,462) | |||||
Share-based compensation expense | 6,914 | 6,914 | |||||
Balance at Dec. 31, 2015 | $ 408 | $ 296,324 | $ (7,949) | $ 62,991 | $ (43,653) | $ 308,121 | |
Balance (in shares) at Dec. 31, 2015 | 40,836 | (3,301) | |||||
[1] | AOCI—Accumulated Other Comprehensive Income (Loss) |
CONSOLIDATED STATEMENTS OF CHA8
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | Feb. 25, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||
Common Stock, Dividends, Per Share, Declared | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.36 | $ 0.36 | $ 0.36 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Cash Flows From Operating Activities: | |||
Net income (loss) | $ (11,938) | $ (1,337) | $ 11,110 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and software and leasehold amortization | 37,810 | 36,042 | 30,971 |
Amortization of intangible assets | 18,347 | 12,655 | 18,834 |
Share-based compensation expense | 13,748 | 13,098 | 10,008 |
Fair value adjustment to contingent consideration | (1,182) | 1,142 | 2,580 |
Loan fee amortization and write-off | 2,421 | 2,153 | 1,903 |
Provision for doubtful accounts | (158) | 3,552 | 2,411 |
Deferred income taxes | 25,546 | (538) | (6,517) |
Excess tax benefit related to share-based compensation | (440) | (1,142) | (1,328) |
Impairment of goodwill and identifiable intangible assets | 1,162 | ||
Other, net | 1,629 | 364 | (803) |
Changes in operating assets and liabilities: | |||
Trade accounts receivable | (8,580) | 22,513 | (43,392) |
Prepaid expenses and other assets | (2,730) | (1,180) | (2,281) |
Accounts payable and other liabilities | 4,717 | (3,882) | 16,063 |
Client deposits | 1,060 | (182) | (13,377) |
Deferred revenue | (287) | (1,748) | 877 |
Income taxes | 181 | (11,700) | 5,858 |
Other, net | (88) | (319) | |
Net cash provided by operating activities | 81,306 | 69,722 | 32,598 |
Cash Flows From Investing Activities: | |||
Cash paid for business acquisitions, net of cash acquired | (124,550) | (302) | |
Purchase of property and equipment | (19,860) | (28,885) | (34,646) |
Internally developed software costs | (9,245) | (7,154) | (6,061) |
Cash proceeds from sale of assets | 110 | 924 | 5 |
Net cash used in investing activities | (153,545) | (35,417) | (40,702) |
Cash Flows From Financing Activities: | |||
Debt issuance costs | (1,681) | (837) | (8,141) |
Proceeds from borrowings of long-term debt | 75,000 | 300,000 | |
Repayment of long-term debt and other long-term obligations | (14,015) | (10,821) | (7,903) |
Proceeds from revolver borrowings | 23,000 | 88,000 | |
Repayment of revolver borrowings | (23,000) | (287,000) | |
Payment of acquisition-related liabilities | (92) | (4,962) | (3,139) |
Excess tax benefit related to share-based compensation | 440 | 1,142 | 1,328 |
Common stock repurchases | (4,183) | (3,982) | (29,396) |
Cash dividends paid | (13,239) | (12,793) | (12,891) |
Proceeds from exercise of stock options | 3,886 | 12,503 | 3,005 |
Net cash provided by (used in) financing activities | 46,116 | (19,750) | 43,863 |
Effect of exchange rate changes on cash | (483) | (665) | 769 |
Net increase (decrease) in cash and cash equivalents | (26,606) | 13,890 | 36,528 |
Cash and cash equivalents at beginning of period | 54,226 | 40,336 | 3,808 |
Cash and cash equivalents at end of period | 27,620 | 54,226 | 40,336 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 17,684 | 14,056 | 10,381 |
Cash (recovered) paid for income taxes, net | (5,637) | 8,324 | 7,488 |
Non-cash investing and financing transactions: | |||
Property, equipment, and leasehold improvements accrued in accounts payable | 3,492 | 2,413 | 10,261 |
Capital expenditures funded by capital lease borrowings | 6,503 | 446 | 7,902 |
Capital leases assumed in business acquisition | 9,061 | ||
Dividends declared | $ 3,566 | 3,376 | $ 3,142 |
Notes payable (Note 5) | 12,895 | ||
Acquisition-related liabilities | $ 976 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Epiq Systems, Inc. ("Epiq," "the Company," "we," "us," or "our") is a leading provider of professional services and integrated technology for the legal profession. We combine expert services, proprietary and select third-party software, and a global infrastructure to serve our clients as a strategic partner. Our innovative solutions and professional services are designed for a variety of client legal matters, including litigation, investigations, financial transactions and regulatory compliance as well as the administration of corporate restructuring and bankruptcies, class action and mass tort proceedings, federal regulatory actions and data breach responses. Principles of Consolidation The Consolidated Financial Statements include the accounts of Epiq and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. See "Recently Issued Accounting Standards" included in Note 1 and Note 10 to the Consolidated Financial Statements for additional information. Use of Estimates The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the carrying amount of intangibles, goodwill, and valuation allowances for receivables, contingencies and deferred income tax assets. Actual results can, and often do, differ from those assumed in our estimates. Revenue Recognition We have agreements with clients pursuant to which we deliver various services and solutions. Our significant sources of revenue are: · Fees contingent upon the month-to-month delivery of services defined by client contracts, such as claims processing, claims reconciliation, professional services, call center support, controlled disbursement services, project management, collection and forensic services, consulting services, document review services and conversion of data into an organized, searchable electronic database. The amount we earn varies based primarily on the size and complexity of the engagement, the number of hours of professional services provided and the number of documents or volume of data processed or reviewed. · Legal noticing services to parties of interest in bankruptcy, class action, federal regulatory action, data breach and other administrative matters including direct notification and media campaign and advertising management. · Data hosting fees and volume-based fees. · Fixed-fees related to our managed service eDiscovery solutions. · Monitoring and noticing fees earned based on monthly or on-demand requests for information provided through our AACER® software product. · Deposit-based fees earned based on a percentage of Chapter 7 assets placed on deposit with designated financial institutions by our trustee clients. Our trustee clients do not directly pay fees in connection with Chapter 7 related services. The fees earned are based on assets placed on deposit by our trustee clients and may vary based on fluctuations in short-term interest rates and changes in service fees assessed on such deposits. · Reimbursed expenses, primarily related to postage on mailing services and other pass-through expenses. Multiple Element Arrangements We have arrangements with clients pursuant to which we provide multiple elements of services that are billed based on unit prices and volumes for which we have identified each deliverable service element. Based on our evaluation of each element, we have determined that each element delivered has stand-alone value to our clients because we or other vendors sell such services separately from any other services and deliverables. However, we don't sell these services on a stand-alone basis in sufficient volumes to establish evidence of fair value. Therefore, we obtain objective and reliable evidence of the fair value of each element based on third-party evidence of similar services or, for elements where third-party evidence cannot be established, the best estimate of sales price has been used. Our arrangements do not include general rights of return. Accordingly, each of the service elements in our multiple element case and document management arrangements qualifies as a separate unit of accounting. We allocate revenue to the various units of accounting in our arrangements based on the fair value or best estimated selling price of each unit of accounting, which is generally consistent with the stated prices in our arrangements. In instances when revenue recognition is deferred, we utilize the relative selling price method to calculate the revenue recognized for each period. We recognize revenue for each service deliverable when the following criteria are satisfied: · we have evidence of an arrangement, · the services are rendered, · our fee becomes fixed and determinable, and · collectability is reasonably assured. Payments received in advance of satisfaction of the related revenue recognition criteria are recognized as a client deposit until all revenue recognition criteria have been satisfied. Reimbursements We have revenue related to reimbursable expenses, primarily postage. Reimbursable postage and other reimbursable expenses are recorded gross in the Consolidated Statements of Operations as "Reimbursable expenses" in the revenue and operating expenses sections. Costs Related to Contract Acquisition, Origination, and Set-up We expense client contract acquisition, origination, and set-up costs as incurred. Share-Based Compensation We account for all share-based compensation in accordance with fair value accounting principles. Under this method, compensation expense is measured at the grant date fair value net of estimated forfeitures, and is recognized on a straight-line basis over the requisite service period. The grant date fair value of stock option awards is estimated using a Black-Scholes option-pricing model. The grant date fair value of nonvested share awards is the quoted market value of Epiq's common stock on the grant date. Income Taxes The liability method is used in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law. Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Realization of the deferred tax assets is dependent on our ability to generate sufficient future taxable income and, if necessary, execution of our tax planning strategies. In the event we determine that sufficient future taxable income, taking into consideration tax planning strategies, may not generate sufficient taxable income to fully realize net deferred tax assets, we may be required to establish or increase valuation allowances by a charge to income tax expense in the period such a determination is made. We record uncertain tax positions on the basis of a two-step process whereby: (1) we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position; and (2) for those tax positions that meet the more likely than not recognition, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in income tax expense (benefit). Application of this guidance requires numerous estimates based on available information. We consider many factors when evaluating and estimating our tax positions and tax benefits, and our recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As we obtain additional information, we may need to periodically adjust our recognized tax positions and tax benefits. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and in banks and all liquid investments with original maturities of three months or less at the time of purchase. Accounts Receivable Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We maintain an allowance for doubtful accounts to reserve for potentially uncollectible receivables. We review accounts receivable to identify amounts due from clients which are past due to identify specific clients with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant clients based on ongoing credit evaluations. At December 31, 2015 and 2014, the allowance for doubtful accounts was $1.0 million and $4.0 million, respectively. Property and Equipment, Software and Leasehold Improvements Property and equipment, including leasehold improvements and internal use, are stated at cost and depreciated or amortized on a straight-line basis over the estimated useful life of each asset or, for leasehold improvements, the lesser of the lease term or useful life. Depreciation expense is computed on the straight-line method over estimated useful lives as follows: Buildings and building improvements 30 years Leasehold improvements Life of lease or asset life if less Furniture and fixtures 5 - 7 years Computer equipment and purchased software 2 - 5 years Transportation equipment 3 - 7 years Operations equipment 3 - 7 years Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. We first evaluate recoverability of assets to be held and used by comparing the carrying amount of the asset to undiscounted expected future cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment loss recognized is the amount by which the carrying amount exceeds the fair value. Internally Developed Software Certain internal software development costs incurred in the creation of computer software products for sale, lease or otherwise to be marketed are capitalized once technological feasibility has been established. Capitalized costs are amortized; beginning in the period the product is available for general release, based on the ratio of current revenue to current and estimated future revenue for each product with minimum annual amortization equal to the straight-line amortization over the remaining estimated economic life of the product. Certain internal software development costs incurred in the creation of computer software products for internal use are capitalized when the preliminary project phase is complete and when management, with the relevant authority, authorizes and commits funding to the project and it is probable the project will be completed and the software will be used to perform the function intended. Capitalized costs are amortized, beginning in the period each module or component of the product is ready for its intended use, on a straight-line basis over the estimated economic life of the product. Internally developed software is tested annually for impairment, or more often if an event occurs or circumstances change that would more likely than not reduce the net realizable value to less than its unamortized capitalized cost. Intangible Assets Identifiable intangible assets, resulting from various business acquisitions, consist of client relationships, agreements not to compete, technology, and trade names. We amortize the identifiable intangible assets over their estimated economic benefit period, generally from three to ten years. These definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances have indicated that the carrying amount of these assets might not be recoverable. If we were to determine that events and circumstances warrant a change to the estimate of an identifiable intangible asset's remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from other events and circumstances may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. During the second quarter of 2015, we recorded a noncash impairment charge of $1.0 million related to acquired technology assets resulting from the sale of Minus –10 Software, LLC ("Minus 10"). See Note 4 to the Consolidated Financial Statement for additional information. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. We assess goodwill for impairment on at least an annual basis, as of July 31, at a reporting unit level and have identified our operating segments (Technology and Bankruptcy and Settlement Administration) as our reporting units for purposes of testing for goodwill impairment. When performing our goodwill impairment testing, the fair values of our reporting units are determined based on valuation techniques using the best available information, primarily discounted cash flow projections (income approach) and market multiples derived from a set of competitors or companies with comparable market characteristics (market approach). We make significant assumptions and estimates, which utilize Level 3 measures, about the extent and timing of future cash flows, which are dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. In addition, financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital, used to determine our discount rate, and through our stock price, used to determine our market capitalization. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit, and there can be no assurance that we will realize that value. As of July 31, 2015, which is the date of our most recent impairment test, the fair value of each of our reporting units was in excess of the carrying value of the reporting unit. Goodwill is assessed between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. During the second quarter of 2015, we recorded a goodwill impairment charge of $0.2 million resulting from the sale of Minus 10. See Note 4 to the Consolidated Financial Statement for additional information. As of December 31, 2015, there have been no events since our last annual test to indicate that it is more likely than not that the recorded goodwill balance had become impaired. Our consolidated goodwill totaled $477.5 million as of December 31, 2015. Debt Issuance Costs Incremental, third-party costs related to establishing debt arrangements are capitalized and amortized based on the terms of the related debt. The unamortized costs related to our senior secured revolving credit facility are included in "Other long-term assets" on our Consolidated Balance Sheets. All other unamortized debt issuance costs are included as a direct deduction from "Long-term obligations" on our Consolidated Balance Sheets. Amortization of debt issuance costs is included in "Interest expense" on our Consolidated Statements of Operations. Derivative Instruments We may use derivative financial instruments as part of our risk management strategy to reduce our interest rate exposure. We do not enter into derivative financial instruments for speculative or trading purposes. Derivatives are measured at fair value and recorded on the balance sheet as either assets or liabilities. Changes in the fair value of derivatives are recorded either through current earnings or comprehensive income (loss), depending on hedge designation. Gains and losses on derivative instruments classified as cash flow hedges are reported in comprehensive income and are reclassified into earnings in the periods in which earnings are impacted by the variability of the cash flow of the hedged item. The ineffective portion of all hedge transactions is recognized in current period earnings. Foreign Currency Translation Local currencies are the functional currencies for our operating subsidiaries. Accordingly, assets and liabilities of these subsidiaries are translated at the rate of exchange at the balance sheet date. Adjustments from the translation process are part of accumulated other comprehensive income (loss) and are included as a separate component of equity. Income and expense items of significant value are translated as of the date of the transactions for these subsidiaries; however, day to day operational transactions are translated at average rates of exchange. As of December 31, 2015 and 2014, cumulative translation adjustments included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets were $5.2 million and $3.0 million, respectively. Business Combinations Accounting for the acquisition of a business requires us to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed, and contingent consideration obligations. The purchase consideration of the acquisition is allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability, and any remaining purchase consideration is classified as goodwill. This allocation process requires the use of estimates and assumptions, including quoted market prices and estimates of future cash flows to be generated by the acquired assets. We include the results of operations of the businesses that we acquire as of the respective dates of acquisition. Acquisition-related costs for potential and completed acquisitions are expensed, as incurred, and are included in "Other operating income (expense)" on our Consolidated Statements of Operations. Contingencies We may be involved in various legal proceedings from time to time in the ordinary course of business. Except for income tax contingencies, we record accruals for contingencies to the extent that we conclude their occurrence is probable and the related liability can be reasonably estimated. We record anticipated recoveries under existing insurance contracts when we are assured of recovery. Many factors are considered when making these assessments, including the progress of the case, opinions or views of legal counsel, prior case law, our experience or the experience of other companies with similar cases, and our intent on how to respond. Litigation and other contingencies are inherently unpredictable and excessive damage awards do occur. As such, these assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board (the "FASB") issued accounting standard update ("ASU") No. 2016-02, Leases (Topic 842). This new lease guidance requires that an entity should recognize assets and liabilities for leases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term. Leases would be classified as either Type A leases (generally today's capital leases) or Type B leases (generally today's operating leases). For certain leases of assets other than property (for example, equipment, aircraft, cars, trucks), a lessee would classify the lease as a Type A lease and would do the following: (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of lease payments and (2) recognize the unwinding of the discount on the lease liability as interest separately from the amortization of the right-of-use asset. For certain leases of property (that is, land and/or a building or part of a building), a lessee would classify the lease as a Type B lease and would do the following: (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of lease payments and (2) recognize a single lease cost, combining the unwinding of the discount on the lease liability with the amortization of the right-of-use asset, on a straight-line basis. This guidance also provides accounting updates with respect a lessor accounting under a lease arrangement. Historically, we have not engaged in the business of leasing assets to third parties. This new lease guidance is effective for Epiq beginning in the first quarter of fiscal 2019. Entities have the option of using either a full retrospective or a modified approach (cumulative effect adjustment in period of adoption) to adopt the new guidance. Early adoption is permitted for all entities. We are currently assessing the full impact of this new guidance on our consolidated financial position, results of operations and cash flows, however, due to the magnitude of our operating leases and related rent expense, we expect the adoption of this accounting guidance to have a material effect on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): "Balance Sheet Classification of Deferred Taxes". Under this guidance, entities are required to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. This guidance is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. Entities are permitted to adopt this guidance either prospectively or retrospectively. We elected to early adopt this guidance retrospectively in the fourth quarter of 2015, and as a result, $4.6 million of current deferred tax assets on our December 31, 2014 Consolidated Balance Sheet was reclassified from current assets to a direct reduction of long-term deferred income tax liabilities. The adoption of this guidance did not affect our results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest: "Simplifying the Presentation of Debt Issuance Costs" (ASU 2015-03), which requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Since ASU 2015-03 does not address deferred issuance costs for line-of-credit arrangements, in August 2015, the FASB issued ASU No. 2015-15, "Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" (ASU 2015-15). ASU 2015-15 allows an entity to defer debt issuance costs associated with line-of-credit arrangements, including arrangements with no outstanding borrowings, classify them as an asset, and amortize them over the term of the arrangements. ASU 2015-03 and ASU 2015-15 are effective retrospectively for annual and interim periods beginning after December 15, 2015, with early adoption permitted. We elected to early adopt this guidance in the fourth quarter of 2015, and as a result, reclassification of debt issuance costs related to our senior secured term loan resulted in reductions in "Other long-term assets" and "Long-term obligations" of $5.3 million and $5.7 million as of December 31, 2015 and 2014, respectively. The adoption of this guidance did not affect our results of operations or cash flows. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): "Simplifying the Accounting for Measurement-Period Adjustments", which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Under this guidance, acquirers must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. We elected to early adopt this guidance in the third quarter of 2015. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", which supersedes the revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition. This new revenue guidance outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most of the current revenue recognition guidance. The new guidance requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract with a customer, (2) identify the performance obligations under the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations under the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance also provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. This new revenue guidance was going to be effective for Epiq beginning in the first quarter of fiscal 2017. In August 2015, the FASB deferred the effective date by one year. Early adoption as of the original effective date will be permitted. Entities have the option of using either a full retrospective or a modified approach (cumulative effect adjustment in period of adoption) to adopt the new guidance. We are currently assessing the impact of this new revenue guidance on our consolidated financial position, results of operations and cash flows and will adopt this new guidance effective January 1, 2018. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 2: PROPERTY AND EQUIPMENT The classification of property and equipment is as follows (in thousands): December 31, 2015 2014 Land $ $ Buildings and building and leasehold improvements Furniture and fixtures Computer equipment and purchased software Transportation equipment Operations equipment Construction in progress ​ ​ ​ ​ ​ ​ ​ ​ Accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and software and leasehold amortization for the years ended December 31, 2015, 2014 and 2013, was $37.8 million, $36.0 million and $31.0 million, respectively. Computer equipment and internal use software includes assets acquired under capital leases. At December 31, 2015 and 2014, the gross carrying values of assets under capital lease were $14.9 million and $8.4 million, respectively. Accumulated amortization related to these capital leases totaled $7.3 million and $4.0 million at December 31, 2015 and 2014, respectively. |
INTERNALLY DEVELOPED SOFTWARE
INTERNALLY DEVELOPED SOFTWARE | 12 Months Ended |
Dec. 31, 2015 | |
INTERNALLY DEVELOPED SOFTWARE | |
INTERNALLY DEVELOPED SOFTWARE | NOTE 3: INTERNALLY DEVELOPED SOFTWARE The change in the carrying amount of internally developed software costs is as follows (in thousands): Year Ended December 31, 2015 2014 Amounts capitalized, beginning of year $ $ Development costs capitalized Dispositions ) ) ​ ​ ​ ​ ​ ​ ​ ​ Amounts capitalized, end of year Accumulated amortization, end of year ) ) ​ ​ ​ ​ ​ ​ ​ ​ Internally developed software, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitalized software development costs for projects in progress were $4.7 million and $1.0 million at December 31, 2015 and 2014, respectively. For the years ended December 31, 2015, 2014 and 2013, amortization expense related to capitalized software development costs was $8.3 million, $8.6 million and $8.8 million, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 4: GOODWILL AND INTANGIBLE ASSETS The change in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 was as follows (in thousands): Technology Bankruptcy and Settlement Administration Total Balance as of December 31, 2013 $ $ $ Acquisition — Foreign currency translation and other ) — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2014 Acquisition — Impairment — ) ) Foreign currency translation and other ) — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2015 $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Identifiable intangible assets as of December 31, 2015 and 2014 consisted of the following (in thousands): December 31, 2015 December 31, 2014 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizing intangible assets: Client relationships $ $ $ $ Trade names Technology Non-compete agreements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Client relationships, trade names, technology and non-compete agreements carry a weighted average life of 8 years, 10 years, 3 years and 5 years, respectively. Aggregate amortization expense related to amortizing intangible assets was $18.3 million, $12.7 million and $18.8 million for the years ended December 31, 2015, 2014, and 2013, respectively. The following table presents the estimated future amortization expense related to amortizing intangible assets held at December 31, 2015 (in thousands): Year Ending December 31, Future Amortization Expense 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Impairment of goodwill and identifiable intangible assets During the second quarter of 2015, management approved a plan to exit the operating business of Minus 10, and as a result, we recorded a non-cash impairment charge of $1.2 million related to the Minus 10 goodwill and acquired intangible assets. In August 2015, we sold our 100% equity interest in Minus 10 for an amount immaterial to the Consolidated Financial Statements. The historical assets and liabilities and operating results of Minus 10 are included in the Bankruptcy and Settlement Administration segment until the date of disposition and are immaterial to the Consolidated Financial Statements. |
LONG-TERM OBLIGATIONS
LONG-TERM OBLIGATIONS | 12 Months Ended |
Dec. 31, 2015 | |
LONG-TERM OBLIGATIONS | |
LONG-TERM OBLIGATIONS | NOTE 5: LONG-TERM OBLIGATIONS Long-term obligations consisted of the following (in thousands): As of December 31, 2015 As of December 31, 2014 Principal Unamortized Debt Issuance Costs Principal Unamortized Debt Issuance Costs Senior secured term loan, variable interest rate, due 2020 $ $ ) $ $ ) Capital leases, due various dates from 2016 to 2021 — — Notes payable, 2.20%, due 2017 — — Acquisition-related liabilities — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total obligations ) ) Less: Obligations due within one year — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term obligations $ $ ) $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Credit Agreement In August 2013, we entered into a $400 million senior secured credit facility, which originally consisted of a $100 million senior secured revolving loan, maturing in August 2018, and a $300 million senior secured term loan, maturing in August 2020 (the "Credit Agreement"). The Credit Agreement also provides for a $200 million uncommitted accordion (the "Accordion") for access to incremental capital. The Accordion provides for increasing the senior secured term loan from the original $300 million up to $500 million and/or increasing the total capacity under the senior secured revolving loan commitment from its original $100 million up to a maximum of $200 million with the aggregate total increase in the term loan and revolving loans not to exceed $200 million. Access to the Accordion amount is subject to securing additional commitments with financial institutions and compliance with the covenants specified in the Credit Agreement. In March 2014, we entered into the First Amendment to the Credit Agreement ("First Amendment"), which reduced the interest rate options for our senior secured term loan and reduced the LIBOR floor for an aggregate reduction of 50 basis points. Effective with the date of the First Amendment, the senior secured term loan bore interest as follows: (1) 2.50% plus prime rate subject to a 1.75% floor; or (2) 3.50% plus one, two, three or six month LIBOR subject to a 0.75% LIBOR floor, for an aggregate floating rate floor of 4.25%. In January 2015, we entered into the Second Amendment to the Credit Agreement (the "Second Amendment"), which increased the senior secured term loan interest rate options by 25 basis points to the following: (1) 2.75% plus prime rate subject to a 1.75% floor; or (2) 3.75% plus one, two, three or six month LIBOR subject to a 0.75% LIBOR floor, for an aggregate floating rate floor of 4.50%. The Second Amendment also amended the definition of "Applicable Margin" increasing the margin determined by reference to our consolidated net leverage ratio (as defined in the Credit Agreement) for purposes of calculating the interest rate for base rate loans, Eurodollar loans and the fee applicable to letters of credit as specified therein. In addition, the Second Amendment amended the definitions of "Consolidated EBITDA", "Consolidated Net Income" and "Excess Cash Flow" to permit us to add back certain charges as described in the Credit Agreement. In April 2015, we entered into the Third Amendment to the Credit Agreement (the "Third Amendment"), which increased the borrowings outstanding under the senior secured term loan by an aggregate principal amount of $75 million. The Third Amendment provides for repayment of borrowings outstanding under the senior secured term loan in 21 quarterly payments of principal of $0.9 million, commencing on June 30, 2015, with the remaining principal balance of the term loan due upon the maturity date in August 2020. The Credit Agreement contains certain annual mandatory prepayment terms based on a percentage of excess cash flow. Excess cash flow, as defined in the Credit Agreement includes Consolidated EBITDA (as defined in the Credit Agreement) adjusted for capital expenditures, changes in working capital, interest paid, income taxes paid, principal payments, dividends and certain acquisition-related obligations. Such annual mandatory prepayments are only required when the net leverage ratio exceeds 2.75 to 1.00. As of December 31, 2015, there were no mandatory prepayments outstanding under the senior secured credit facility. In addition, the Credit Agreement contains financial covenants related to a net leverage ratio (as defined in the Credit Agreement) which is not permitted to exceed 4.50 to 1.00 as well as other customary covenants. As of December 31, 2015, we were in compliance with all financial covenants. As of December 31, 2015: · The total borrowing capacity under the senior secured credit facility was $475 million consisting of a $100 million senior secured revolving loan and a $375 million amortizing senior secured term loan. There were no borrowings outstanding under the senior secured revolving loan. · All outstanding borrowings under the senior secured term loan were based on the 0.75% LIBOR floor and the applicable margin was 3.75% for an aggregate floating rate floor of 4.50%. · We were in compliance with all financial covenants. · We had $0.8 million in letters of credit outstanding that reduce the borrowing capacity under the senior revolving loan. Derivative Instruments Interest rate cap In November 2013, we entered into a two-year 3% interest rate cap agreement for a notional amount of $150.0 million equal to the portion of the senior secured term loan being hedged. In August 2015, the interest rate cap expired with a fair value on the date of expiration that was de minimis to the Consolidated Financial Statements. All changes in the estimated fair value of the interest rate cap were included in accumulated other comprehensive income (loss) and represented a de minimis amount for the fiscal years ended December 31, 2015, 2014 and 2013. The hedge was determined to be highly effective during the period from inception of the hedge through expiration with no ineffectiveness recognized in earnings. Interest rate swap In April 2014, we entered into a forward interest rate swap effective from August 31, 2015 through August 27, 2020, with a notional amount of approximately $73.7 million equal to the portion of the outstanding amortized principal amount of the senior secured term loan being hedged. Under the interest rate swap agreement we will pay a fixed amount of interest of 2.81% on the notional amount and the counterparty will pay a floating amount of interest based on LIBOR with a one-month designated maturity subject to a floor of 0.75% which is consistent with our obligation under the term loan. The interest rate swap contains a floor of 0.75% to ensure that the one-month LIBOR received on each settlement of the interest rate swap will not be less than our LIBOR floor obligation to lenders of 0.75%. The objective of entering into this interest rate swap was to eliminate the variability of the cash flows in interest payments related to the portion of the debt being hedged. The interest rate swap qualifies as a cash flow hedge and, as such, is being accounted for at estimated fair value with changes in estimated fair value being deferred in accumulated other comprehensive income (loss) until such time as the hedged transaction is recognized in earnings. The hedge was determined to be highly effective during the period from inception through December 31, 2015 and is expected to continue to be highly effective in mitigating the risks of rising interest rates. Changes in the fair value of the interest rate swap for the fiscal years ended December 31, 2015 and 2014 were losses of $1.4 million and $2.5 million, respectively, and are included in "Accumulated other comprehensive loss" on the Consolidated Balance Sheets. The fair value of the interest rate swap as of December 31, 2015 and 2014 was a liability of $3.9 million and $2.5 million, respectively, and is included in "Other long-term liabilities" on the Consolidated Balance Sheets. We manage exposure to counter-party credit risk related to our derivative positions by entering into contracts with various major financial institutions that can be expected to fully perform under the terms of such instruments. Capital Leases We lease certain equipment under capital leases that generally require monthly payments with final maturity dates during various periods through 2021. As of December 31, 2015, our capital leases had a weighted-average interest rate of approximately 4.64%. See Note 2 to the Consolidated Financial Statements for additional information related to assets purchased under capital leases. Notes Payable In November 2014 we entered into a note payable related to a software license and maintenance agreement that bears interest of approximately 2.20% and is payable quarterly through September 2017. Acquisition-related Liabilities Acquisition-related liabilities consisted of the following (in thousands): December 31, 2014 Minus 10 deferred acquisition price $ Minus 10 contingent consideration ​ ​ ​ ​ ​ Total acquisition-related liabilities $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See Note 9 to the Consolidated Financial Statements for additional information related to the Minus 10 contingent consideration. Maturities of Long-Term Obligations The annual maturities of long-term obligations for the next five fiscal years and thereafter are as follows (in thousands): Capital Leases Year Ending December 31, Credit Agreement Minimum Lease Payments Less Interest Principal Amount Note Payable Total Principal Payments 2016 $ $ $ ) $ $ $ 2017 ) 2018 ) — 2019 ) — 2020 ) — Thereafter — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
OPERATING LEASES
OPERATING LEASES | 12 Months Ended |
Dec. 31, 2015 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 6: OPERATING LEASES We have non-cancelable operating leases for office space at various locations expiring at various times through 2026. Each of the leases requires us to pay all executory costs (property taxes, maintenance and insurance). Certain of our lease agreements provide for scheduled rent increases during the lease term. Rent expense is recognized on a straight-line basis over the lease term. Landlord-provided tenant improvement allowances are recorded as a liability and amortized as a reduction to rent expense over the lease term. Additionally, we have non-cancelable operating leases for automobiles expiring through 2018. Future minimum lease payments for the next five fiscals years and thereafter are as follows (in thousands): Year Ending December 31, Total Future Minimum Lease Payments 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expense related to operating leases for the years ended December 31, 2015, 2014 and 2013 was approximately $13.5 million, $11.4 million and $12.6 million, respectively and is included in "Selling, general and administrative expense" in the Consolidated Statements of Operations. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2015 | |
EQUITY | |
EQUITY | NOTE 7: EQUITY Share Repurchases On June 1, 2012, our Board authorized the repurchase, through December 31, 2013, of up to an aggregate of $35.0 million of our outstanding shares of common stock (the "2012 Program"). During the year ended December 31, 2013, we purchased 1,768,296 shares of common stock under the 2012 Program for $22.9 million, at an average cost of $12.94 per share. On November 6, 2013, the board of directors of Epiq (the "Board") authorized the repurchase, on or prior to December 31, 2015, of our outstanding shares of common stock up to an aggregate of $35.0 million (the "2014 Share Repurchase Program"). There were no repurchases of shares of common stock under the 2014 Share Repurchase Program. The 2014 Share Repurchase Program expired on December 31, 2015. We have a policy that requires us to repurchase shares of our common stock to satisfy employee tax withholding obligations upon the vesting of restricted stock awards or the exercise of stock options and, at the participant's election, shares of common stock surrendered to us for satisfaction of the exercise price of stock options. During the years ended December 31, 2015, 2014 and 2013, we repurchased 230,021 shares of common stock for $4.2 million, 276,032 shares of common stock for $4.0 million, and 471,248 shares of common stock for $6.5 million, respectively, related to employee tax withholding obligations. Additionally, during the years ended December 31, 2015, 2014, and 2013, shares of common stock surrendered to us to satisfy the exercise price of stock options were 73,442 shares, 47,058 shares and 1,143,119 shares, respectively. Dividends Our Board declared quarterly cash dividends of $0.09 per common share in each of the four quarters of 2015, 2014 and 2013, and representing $13.5 million, $13.0 million and $12.8 million, respectively, in total dividends. Total dividends paid during 2015, 2014, and 2013 were $13.2 million, $12.8 million and $12.9 million, respectively. Dividends payable were approximately $3.6 million and $3.4 million at December 31, 2015 and 2014, respectively. On February 16, 2016, we paid $3.3 million of dividends to holders of our common stock. The remaining accrued dividends payable of $0.3 million is related to forfeitable dividends that are being withheld on restricted stock awards until the award vests. On February 25, 2016, the Board declared a cash dividend of $0.09 per outstanding share of common stock payable on May 2, 2016 to shareholders of record as of the close of business on April 4, 2016. Under our Credit Agreement, our ability to pay dividends and repurchase securities from equity holders is limited by a requirement that such payments are not to exceed, in the aggregate, 50% of consolidated adjusted net income (as defined in the Credit Agreement), on a cumulative basis for all quarterly periods from the closing date of the Credit Facility and ending prior to the date of payment of dividends or repurchase of our common stock. Further, we are unable to declare and pay dividends or repurchase securities from equity holders if our net leverage ratio (as defined in the Credit Agreement) on a pro forma basis would exceed 4.25 to 1.0. Accumulated Other Comprehensive Loss The following table summarizes the components of Accumulated other comprehensive loss (in thousands): Year Ended December 31, 2015 2014 2013 Foreign currency translation adjustments Balance at beginning of period $ ) $ ) $ ) Other comprehensive income (loss), net of tax ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at end of period $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized loss on cash flow hedges Balance at beginning of period $ ) $ — $ — Other comprehensive loss, net of tax ) ) — Reclassification adjustments, net of tax — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at end of period $ ) $ ) $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholder Rights Agreement and Rights Dividend On September 18, 2014, we entered into a Rights Agreement (the "Rights Agreement") pursuant to which the Board declared a dividend of one preferred stock purchase right (a "Right") for each outstanding share of our common stock. On July 7, 2015, all Rights issued under the Rights Agreement expired and are no longer outstanding. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2015 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | NOTE 8: EMPLOYEE BENEFIT PLANS Stock Purchase Plan We have an employee stock purchase plan that allows employees to purchase shares of our common stock through payroll deduction. The purchase price for all employee participants is based on the closing bid price on the last business day of the month. Defined Contribution Plan We sponsor the Epiq 401(k) Plan, whereby participants can choose to make contributions in the form of salary deductions pursuant to Section 401(k) of the Internal Revenue Code. We match employee contributions to the Epiq 401(k) plan up to a maximum of 6% of compensation. We also sponsor other 401(k) plans covering eligible employees of certain of our subsidiaries. Our expense related to defined contribution plans was approximately $3.3 million, $3.0 million and $2.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 9: FAIR VALUE MEASUREMENTS Accounting standards establish a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are listed below: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than those included in Level 1, such as quoted market prices for similar assets and liabilities in active markets or quoted prices for identical assets in inactive markets. Level 3—Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing an asset or liability. Recurring Fair Value Measurements As of December 31, 2015 and 2014, our assets and liabilities that are measured and recorded at fair value on a recurring basis were as follows (in thousands): Fair Value Measurements Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs Carrying Value (Level 1) (Level 2) (Level 3) December 31, 2015: Liabilities: Interest rate swap $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2014: Assets: Interest rate cap $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: Interest rate swap $ $ — $ $ — Acquisition-related contingent consideration — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Liabilities $ $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Rate Swap The fair value of our interest rate swap (as described in Note 5 to the Consolidated Financial Statements) was determined via the income and market approaches utilizing certain observable inputs including the forward and spot curves for the underlying 1 month LIBOR over the remaining term of the agreement. Based on these characteristics the interest rate swap is classified as Level 2. The fair value of the interest rate swap is subject to material changes based upon changes in the forward curve for 1 month LIBOR and the volatility thereof. Acquisition-related contingent consideration Minus 10 In connection with our April 2014 acquisition of Minus 10, we established a contingent consideration liability considered to be a Level 3 liability. The fair value of the Minus 10 contingent consideration was based on management's estimate of projected revenues and profit contributions over the measurement period (from April 2014 to December 2020) and an applied discount rate of 25% which was reflective of the inherent risk attributable to this new product line given its status as an early-stage venture. Such unobservable inputs included financial forecasts prepared by management which included estimates of future cash flows, projected revenues and profit contributions, and discount rates. As of the date of acquisition we estimated the original fair value of the contingent consideration to be approximately $0.9 million. During the second quarter of 2015, we remeasured the fair value of the contingent consideration using actual operating results and our revised forecasted operating results for Minus 10 for the remainder of the measurement period. As a result of this remeasurement, the fair value of the contingent consideration was reduced to zero, resulting in a non-cash gain of $1.2 million that is included in "Fair value adjustment to contingent consideration" in the Consolidated Statements of Operations. In August 2015, we sold our 100% equity interest in Minus 10 for an amount immaterial to the Consolidated Financial Statements. There are no further payments remaining under this contingent consideration obligation. De Novo Legal LLC In December 2011, Epiq acquired De Novo Legal LLC and its affiliated companies ("De Novo Legal"). In connection with the acquisition, certain contingent consideration was payable to the De Novo sellers relative to the January 1, 2013 to December 31, 2013 measurement period. In the first quarter of 2014, the sellers disputed our calculation of the earn-out amount and alleged that the performance measure was higher, thereby triggering the next tier of contingent consideration. Epiq and the sellers participated in a dispute resolution process as specified under the acquisition agreement and in April 2014 agreed to settle this matter for a cash payment to the sellers of $1.5 million which was paid to the sellers in April 2014. As a result, we recorded a total adjustment of $1.5 million to the contingent consideration obligation during the three months ended March 31, 2014, of which $1.1 million is included in "Fair value adjustment to contingent consideration" and $0.4 million is included in "Selling, general and administrative expense" in the Consolidated Statements of Operations. There are no further payments remaining under the contingent consideration obligation with respect to De Novo Legal. The following table represents the change in the acquisition-related contingent consideration obligation during the years ended December 31, 2015 and 2014 (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) 2015 2014 Beginning balance January 1 $ $ Present value accretion Payments ) ) Fair value related adjustments ) ​ ​ ​ ​ ​ ​ ​ ​ Ending balance December 31 $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Fair Value Disclosures The carrying amounts of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturities of these financial instruments. As of December 31, 2015 and 2014, the amounts outstanding under both our credit facility and notes payable approximated fair value due to the borrowing rates currently available to us for debt with similar terms and are classified as Level 2. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10: INCOME TAXES Income (loss) before income taxes consists of the following (in thousands): Year Ended December 31, 2015 2014 2013 Income (loss) before income taxes United States $ ) $ ) $ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense (benefit) for 2015, 2014 and 2013 consists of the following (in thousands): Year Ended December 31, 2015 2014 2013 Current: Federal $ ) $ ) $ State ) ) Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total current ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred: Federal ) State ) ) Foreign ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total deferred ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total income tax expense (benefit) $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The jurisdictions where we generate income (or loss) before income taxes have a significant effect on our effective tax rate. The income (or loss) earned in the United States will be subject to an approximate 41% combined statutory federal and state tax rate. Our foreign-sourced income (or loss), which is earned primarily in the United Kingdom, will be subject to a statutory rate of approximately 21%. In 2014, the significantly higher tax rate in computing the tax benefit on the U.S. losses than the tax rate used in computing the tax expense on the foreign income results in an overall effective tax rate that is not customary. The following is a summary of our income tax expense (benefit) and resulting effective tax rate by jurisdiction (in thousands): Year Ended December 31, 2015 2014 2013 Income tax expense (benefit) by jurisdiction: United States $ $ ) $ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated income tax expense (benefit) $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective income tax rate by jurisdiction: United States )% % % Foreign % % % Consolidated effective tax rate % % % A reconciliation of the provision for income taxes at the statutory rate of 35% to the provision for income taxes at our effective rate is shown below (in thousands): Year Ended December 31, 2015 2014 2013 Income tax expense (benefit) at the statutory rate $ $ ) $ Change in taxes resulting from: Valuation allowances State income taxes, net of federal tax effect ) ) Foreign income taxes ) ) ) Permanent differences Uncertain tax positions ) ) Research and development credits ) ) ) Nondeductible compensation ) — Share-based compensation — Domestic production activities deduction — ) ) Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total income tax expense (benefit) $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In December 2015, the Protecting Americans from Tax Hikes Act was passed and permanently extended the research credit retroactively to January 1, 2015. Accordingly, a research tax benefit of approximately $0.6 million is reflected our 2015 results. In April 2015, New York City passed comprehensive corporate income tax reform with most changes effective for years 2015 and beyond. The impact of these changes was not material to the Consolidated Financial Statements. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands): As of December 31, 2015 2014 Deferred tax assets: (1) U.S. net operating loss carryforwards $ $ Foreign net operating loss carryforwards Income tax credit carryforwards Share-based compensation Intangible assets Deferred rent Accrued liabilities Cash flow hedges Allowance for doubtful accounts Other Valuation allowances ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: (1) Prepaid expenses ) ) Goodwill ) ) Property and equipment and software development costs ) ) Deferred debt discharge income ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities ) ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liability $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Temporary differences related to net operating loss carryforwards, income tax credit carryforwards, intangible assets and goodwill as of December 31, 2014 have been reclassified to conform to current year presentation. The net deferred tax liability is presented on the Consolidated Balance Sheets as follows (in thousands): As of December 31, 2015 2014 Other long-term assets $ $ Long-term deferred income tax liability ) ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liability $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ We assess whether valuation allowances should be established against our deferred tax assets based on the consideration of all positive and negative available evidence, using a "more likely than not" standard. In making such assessments, significant weight is to be given to evidence that can be objectively verified such as historical operating results and current trends. During the year ended December 31, 2015, we concluded that a valuation allowance was required due to three years of historical cumulative losses in the U.S. that began during the third quarter of 2015. We had positive cumulative earnings in the U.S. for the three year period ended June 30, 2015. The recent continuing U.S. loss is a significant factor in our assessment as it is objectively verifiable, and therefore, is considered significant negative evidence. Other evidence evaluated is our expectation of future taxable income by jurisdiction, which includes forecasted revenue growth and other factors such as strategic initiatives and industry trends. However, three-year historical cumulative losses are one of the most objectively verifiable forms of negative evidence and although estimating future earnings would be positive evidence, such forecasts are not objectively verifiable and are accordingly given less weight when compared to a three-year historical cumulative loss and recent continuing loss. In establishing a valuation allowance against our U.S. net deferred tax assets during the period, approximately $47.3 million of deferred tax liabilities related to indefinite lived assets (goodwill) that are not amortized for financial reporting purposes were excluded from measurement. Because the deferred tax liability remains on the balance sheet indefinitely until such asset is impaired or disposed, the liability cannot be scheduled to reverse or be considered as a source of future taxable income. As a result, these deferred tax liabilities are excluded from the measurement of the net deferred tax asset requiring a valuation allowance. In addition, tax amortization of the underlying indefinite lived assets results in an increase to the related deferred tax liabilities and an increase to tax expense recognized for each period until the assets are fully amortized for tax purposes. On the basis of this evaluation, as of December 31, 2015, we recorded a valuation allowance of $17.0 million against our applicable U.S. net deferred tax assets, including U.S. federal and state loss carryforwards. In accordance with U.S. GAAP, certain deferred tax assets related to stock awards were excluded from the table of deferred tax assets and liabilities disclosed above. These deferred tax assets were the result of amounts deductible in our tax returns in excess of share-based compensation expense recognized in our Consolidated Statements of Operations. If and when such deferred tax assets are ultimately realized, our total equity balance will increase by $0.3 million. We use tax law ordering for the purpose of determining when excess tax benefits have been realized. We have both U.S. federal and state net operating losses which are carried forward 20 years for federal tax purposes and from 1 to 20 years for state tax purposes. As of December 31, 2015, our cumulative U.S. federal net operating loss was $28.6 million and if not used, would otherwise expire in 2035. The state loss carryforwards arise from both combined and separate state tax filings and were $115.8 million at December 31, 2015. The loss carryforwards expire as follows (in thousands): Calendar Years Amount 2016 - 2020 $ 2021 - 2025 2026 - 2030 2031 - 2035 ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ We have recorded a valuation allowance against all of our combined and separate state loss carryforwards. We also have federal research tax credit carryforwards of $1.3 million that begin to expire in 18 years, and a $0.5 million alternative minimum tax credit carryforward that does not expire. Since this $0.5 million credit does not expire, we have not recorded a valuation allowance against this deferred tax asset. Additionally, we recorded a $1.5 million valuation allowance related to $1.5 million of net state tax credits of which most will expire beginning in 14 years. Our foreign net operating loss carryforwards at December 31, 2015, were $2.9 million of which $1.0 million and $0.4 million will fully expire in 2022 and 2023 respectively. A $0.8 million deferred tax asset has been recorded for the expected tax benefit of these losses which will reduce our foreign income tax payable in future years. We have recorded a $0.7 million valuation allowance against these losses as they have been generated in jurisdictions where insufficient positive evidence exists to support that these losses will be fully utilized. As of December 31, 2014, our valuation allowance of $1.9 million included a $0.9 million valuation allowance related to $1.2 million of state tax credits that have a remaining carryforward period of 13 years; a $0.2 million valuation allowance related to $4.7 million of state net operating loss carryforwards that expire in varying amounts in years 2015 through 2034 and a $0.8 million valuation allowance related to $2.3 million of foreign net operating losses of which $2 million expire by 2023 that have an indefinite remaining carryforward period. Prior to our acquisition of Encore Legal Solutions, Inc. ("Encore") and, as part of a debt restructuring in 2009, Encore elected to defer recognition of approximately $8.9 million of debt discharge income pursuant to Section 108(i) of the Internal Revenue Code of 1986, as amended. For each year 2013 through 2017, we will include approximately $1.8 million of deferred debt discharge income in taxable income. United States income and foreign withholding taxes have not been recognized on the excess of earnings for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such earnings become subject to United States taxation upon the remittance of dividends or a sale or liquidation of the foreign subsidiary. The amount of such excess totaled approximately $35.3 million at December 31, 2015. It is not practicable to estimate the amount of any deferred tax liability related to this amount. The following table summarizes the activity related to our gross unrecognized tax benefits excluding interest and penalties (in thousands): 2015 2014 2013 Unrecognized tax benefits as of January 1 $ $ $ Gross increases for prior year tax positions Gross decreases for prior year tax positions — ) ) Gross increase for current year tax positions Settlements — — ) Lapse of statute of limitations ) ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrecognized tax benefits at December 31 $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2015, 2014 and 2013, the gross amount of unrecognized tax benefits, including penalty and interest, was approximately $5.9 million, $6.3 million and $6.4 million, respectively. If recognized, approximately $4.8 million, $5.1 million and $5.2 million would have affected our effective tax rate in 2015, 2014, and 2013, respectively. During the year ended December 31, 2015, our unrecognized tax benefits increased by $0.2 million related to Iris (defined in Note 13 to the Consolidated Financial Statement) and the increase is included in "Gross increases for prior year tax positions" in the table of gross unrecognized tax benefits. We file income tax returns in the United States federal jurisdiction, Canada, Germany, Hong Kong, India, Japan, Netherlands, the United Kingdom, and various state jurisdictions. We have also made an evaluation of the potential impact of assessments by state and foreign jurisdictions in which we have not filed tax returns. During 2015, we were notified by the Internal Revenue Service that our 2014 federal income tax return would be examined. The exam is in the preliminary stages and we do not believe that an adjustment, if any, would be material. As of December 31, 2015, the 2012 - 2014 and subsequent federal, state and foreign tax returns are subject to examination. In addition, the 2011 statute of limitations remains open in certain state and foreign jurisdictions. Due to the 2014 federal income tax examination currently underway, we are unable to determine the amount of unrecognized tax benefits that may be recognized in the next twelve months. Estimated interest and penalties classified as a component of income tax expense during 2015, 2014, and 2013 totaled $0.1 million, $0.2 million and $0.2 million, respectively. Accrued interest and penalties, included in "Other long-term liabilities" on the Consolidated Balance Sheets totaled $1.1 million and $0.2 million, respectively, as of December 31, 2015. As of December 31, 2014, the accrued interest and penalties were $1.0 million and $0.2 million, respectively. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 11: EARNINGS PER SHARE Basic earnings per common share is computed on the basis of weighted-average outstanding shares of common stock. Diluted earnings per common share is computed on the basis of basic weighted-average outstanding common shares adjusted for the dilutive effect, if any, of dilutive securities which included outstanding stock options and nonvested restricted stock awards. On June 11, 2014, our shareholders approved an amendment and restatement of the 2004 Incentive Plan (defined in Note 12 to the Consolidated Financial Statements), effective January 1, 2014. One of the amendments included in the 2004 Incentive Plan is to specify that dividends are no longer payable on nonvested share awards during the vesting period. Such dividends declared during the vesting period will be accrued and are payable only if and when the nonvested share awards vest. As a result of this amendment, nonvested share awards issued by us are no longer considered to be participating securities because they do not have non-forfeitable rights to dividends. Accordingly, for the years ended December 31, 2015 and 2014 basic and diluted net income per share are calculated using the treasury stock method which does not require the allocation of net income to nonvested shares. For the year ended December 31, 2013, in determining diluted earnings per share, we use the more dilutive earnings per share result between two-class method calculation and the treasury stock method calculation applied to our nonvested share awards. The following table summarizes basic and diluted earnings per share or the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts). For the Year Ended 2015 2014 2013 Net income (loss) $ ) $ ) $ Less: amounts allocated to nonvested shares — — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income available to common stockholders $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: Basic common shares Effect of dilutive securities — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted common shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per common share: Basic net income (loss) per common share $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted net income (loss) per common share $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximately 2.7 million, 3.4 million and 2.0 million stock options and nonvested shares were excluded from the computations of diluted net income per share in 2015, 2014 and 2013, respectively, because the awards would have been antidilutive for the years presented. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
SHARE-BASED COMPENSATION. | |
SHARE-BASED COMPENSATION | NOTE 12: SHARE-BASED COMPENSATION Equity Award Plans In June 2004, our stockholders approved the Epiq Systems, Inc. 2004 Equity Incentive Plan which was subsequently amended and restated (the "2004 Incentive Plan"). The 2004 Incentive Plan provided for aggregate equity awards of 7.5 million shares including the grant of options to acquire shares of common stock, stock appreciation rights, and restricted stock awards. Grants under the 2004 Incentive Plan that expire or terminate unexercised, become unexercisable or are forfeited or are otherwise surrendered to the company to satisfy the exercise price for a stock option or employee payroll tax withholdings in a net share settlement transaction are then available for future grants. At December 31, 2015, there were approximately 0.5 million shares of common stock available for future grants under the 2004 Incentive Plan. On September 3, 2015, the Board adopted the Epiq Systems, Inc. 2015 Inducement Award Plan (the "2015 Inducement Plan"). The Inducement Plan provides for the grant of equity-based awards in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards and shares of Epiq common stock. The Board has reserved 200,000 shares of Epiq common stock for issuance pursuant to equity awards granted under the Inducement Plan to individuals who were not previously employees or non-employee directors of Epiq. The Inducement Plan may be amended or terminated by the Board or the compensation committee of our Board (the "Compensation Committee") at any time. The Inducement Plan was adopted in reliance on Nasdaq Listing Rule 5635(c)(4) and did not require shareholder approval. As of December 31, 2015, there has been no equity awards issued under the Inducement Plan. Share-based Compensation Expense The following table presents total share-based compensation expense (in thousands): Year Ended December 31, 2015 2014 2013 Direct cost of services $ $ $ Selling, general and administrative expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total share-based compensation expense $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Included in share-based compensation expense for the year ended December 31, 2015 is $7.7 million of expense recognized with respect to accrued executive officer and employee incentive compensation awards (the "2015 Annual Incentive Compensation"). The accrual is recorded in "Accrued compensation" on the Consolidated Balance Sheets as of December 31, 2015. The total income tax benefit related to share-based compensation expense recognized in the Consolidated Statements of Operations, gross of any recognized valuation allowances as described in Note 10 to the Consolidated Financial Statements, was $5.7 million, $5.5 million and $4.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. Stock Options Stock options are issued with an exercise price equal to the grant date closing market price of our common stock. Stock options become exercisable under various vesting schedules, ranging from immediate vesting to a seven year vesting period, and expire ten years from the date of grant. The estimated fair value of stock options is determined using the Black-Scholes valuation model. Key inputs and assumptions to estimate the fair value of stock options include the grant price of the award, the expected option term, the volatility of our stock, the risk-free interest rate, and our dividend yield. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by individuals who receive equity awards. The following table presents the weighted-average assumptions used and the weighted-average fair value per stock option granted. No stock options were granted during the year ended December 31, 2013. Year Ended December 31, 2015 2014 Expected life of stock option in years Expected volatility % % Risk-free interest rate % % Dividend yield % % Weighted average grant-date fair value $ $ We estimate the expected term of our stock options based on the historical exercise pattern of groups of employees that have similar historical exercise behavior. The expected volatility is estimated based upon implied volatilities from traded stock options on our stock and on our stock's historical volatility, based on daily stock prices. The expected risk-free interest rate is based on the United States Treasury yield curve in effect at the time of the grant. We calculate the expected dividend yield based on an average of historical stock prices and on our estimate of dividends expected to be paid. A summary of option activity during the year ended December 31, 2015 is presented below (shares and aggregate intrinsic value in thousands): Shares Weighted Average Exercise Price Weighted Average Contractual Term Aggregate Intrinsic Value Outstanding, beginning of period $ Granted Exercised ) Forfeited and expired ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options vested and expected to vest, end of period $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options exercisable, end of period $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional information regarding stock option exercises appears in the table below (in thousands): As of December 31, 2015 2014 2013 Intrinsic value of stock options exercised $ $ $ Cash proceeds from option exercises Tax benefit realized from options exercised during the annual period As of December 31, 2015, total unrecognized compensation expense related to unvested stock options was $1.9 million and will be recognized over a weighted-average period of approximately 2.5 years. Nonvested Share Awards Summary restricted stock activity is presented in the table below (shares in thousands): Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2014 $ Granted Vested ) Forfeited/Canceled ) ​ ​ ​ ​ ​ ​ ​ ​ Non-vested at December 31, 2015 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The fair value of nonvested share awards is based on the closing market price of our common stock on the date of grant. Nonvested share awards entitle the holder to shares of common stock when the award vests. The weighted-average grant date fair value of restricted awards granted during 2015, 2014 and 2013 was $17.94, $15.05 and $12.90, respectively. As of December 31, 2015, total unrecognized compensation expense related to unvested restricted stock awards was $7.2 million and will be recognized over a weighted-average period of approximately 1.7 years. Performance-based restricted stock awards In February 2015, we granted an aggregate of 320,000 shares of performance-based restricted stock awards to executive officers of the Company (the "2015 Executive Officer Performance RSAs"). The 2015 Executive Officer Performance RSAs are earned based upon the achievement of certain financial performance criteria of Epiq for the calendar year ending December 31, 2015 and require certification by the Compensation Committee. On January 28, 2016, the Compensation Committee certified that the performance conditions with respect to all of the 2015 Executive Officer Performance RSAs were achieved, and according to the terms of the underlying award agreements, awards representing 140,000 shares of common stock vested on February 22, 2016. The remaining 180,000 of 2015 Executive Officer Performance RSAs are scheduled to vest, subject to continuing employment, in two equal installments in February 2017 and 2018. In January 2015, we granted 20,000 shares of performance-based restricted stock to a senior management employee ("2015 Management Performance RSAs"). The 2015 Management Performance RSAs are earned based upon the achievement of certain segment level financial performance criteria for the calendar year ending December 31, 2015. One of the performance conditions related to the 2015 Management Performance RSAs was achieved, and awards representing 10,000 shares of common stock vested. The remaining 10,000 shares were forfeited. In January 2014, we granted an aggregate of 450,000 shares of performance-based restricted stock awards ("2014 Executive Officer Performance RSAs") to executive officers of the Company. During the year ended December 31, 2014, 225,000 shares of the 2014 Executive Officer Performance RSAs were forfeited by two former executives in conjunction with their resignations in March 2014 and June 2014, respectively. We did not recognize any expense during 2014 for these forfeited awards. In February 2015, the Compensation Committee certified that the performance condition with respect to the remaining 225,000 shares was achieved and the awards vested on that date. In February 2013, we granted an aggregate of 330,000 shares of performance-based restricted stock awards to executive officers of the Company. In January 2014, the Compensation Committee certified that the performance condition was achieved and the awards vested on that date. Other Restricted Stock Awards During the year ended December 31, 2015, we granted an aggregate of 475,863 shares of restricted stock of which 314,869 shares were granted in connection with the payment of annual incentive compensation to executive officers and employees related to fiscal year 2014. Of the 160,994 remaining, 50,000 vested immediately, the remaining 110,994 shares of restricted stock have vesting periods of one to three years from the grant date. During the year ended December 31, 2014, we granted an aggregate of 659,299 shares of restricted stock of which 281,799 shares of restricted stock were granted in connection with the payment of annual incentive compensation to executive officers for fiscal year 2013 and incentive compensation to employees earned during fiscal year 2014. The remaining 377,500 shares of restricted stock have vesting periods of one to three years from the grant date. During the year ended December 31, 2013, we granted an aggregate of 197,600 shares of restricted stock awards of which 164,100 awards vested upon issuance and the remaining 33,500 awards vested one year from the grant date. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2015 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 13: ACQUISITIONS Acquisition of Iris Data Services, Inc. On April 30, 2015, Epiq and two of its wholly-owned subsidiaries completed the acquisition of all of the capital stock of Iris Data Services, Inc., a Texas corporation ("Iris") pursuant to a Stock Purchase Agreement, dated April 7, 2015 (the "Purchase Agreement"). Under the terms of the Purchase Agreement, the aggregate purchase consideration was $133.8 million (the "Purchase Consideration"), consisting of $124.7 million in cash consideration ("Cash Consideration") and $9.1 million of assumed capital lease obligations of the seller. The Cash Consideration was funded with existing cash and borrowings under our Credit Agreement. Of the Cash Consideration, $68.6 million was paid to the seller at closing and $55.2 million was paid to and then distributed by Iris to participants in the Amended and Restated Iris Data Services, Inc. Participation Plan (the "Plan"), in accordance with the terms of the Plan and the Purchase Agreement. The remaining Cash Consideration of $0.9 million was paid post-closing, consisting of $0.6 million due to Plan participants and $0.3 million related to a working capital adjustment. The aggregate distributions to Plan participants resulted in post-closing tax benefits to Epiq of approximately $23.0 million. In addition, approximately $13.0 million of the Cash Consideration was placed in escrow for fifteen months after the closing as security for potential future indemnification claims. Iris is a leading provider of managed services for the legal profession. The Iris acquisition significantly accelerated Epiq's strategic plan to offer managed services solutions to its existing global client base while bringing Epiq's eDiscovery and document review resources to a new client base. The results of operations of Iris have been included in Epiq's Consolidated Statements of Operations subsequent to the April 30, 2015 acquisition date. Total revenue and net loss related to Iris included in our results of operations for the year ended December 31, 2015 were $29.0 million and $7.1 million, respectively. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. The Purchase Consideration was allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the date of acquisition. This allocation resulted in goodwill of $73.7 million, all of which has been assigned to Epiq's Technology segment. The recognized goodwill is primarily attributable to expected long-term growth in Iris's operating results. Approximately $5.3 million of the goodwill is deductible for income tax purposes. The valuations consist of appraisal reports, discounted cash flow analysis, or other appropriate valuation techniques to determine the fair value of the assets acquired or liabilities assumed. (in thousands) Original Allocation (1) Allocation Adjustments Adjusted Allocation (3) Cash and cash equivalents $ $ — $ Accounts receivable ) Other current assets ) Deferred income tax assets ) (2) Property and equipment — Other long-term assets — Intangible assets — Goodwill ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets acquired ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable Accrued liabilities ) Deferred revenue Deferred income tax liabilities ) (2) — Capital lease obligations — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities assumed ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net assets acquired $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Represents the preliminary allocation of assets acquired and liabilities assumed as of the acquisition date reported in our June 30, 2015 Form 10-Q. (2) Includes the impact of reclassifying current deferred income tax assets and liabilities as non-current in accordance with the retroactive adoption of ASU 2015-17 during the fourth quarter of 2015 and the related netting of deferred income tax assets with deferred income tax liabilities by income tax jurisdiction. (3) Represents the final allocation of assets acquired and liabilities assumed as of the acquisition date. The fair values of intangible assets acquired have been estimated by utilizing a discounted cash flow approach, with the assistance of an independent appraisal firm. The intangible assets acquired as part of the Iris acquisition are being amortized over their expected estimated economic benefit period. The preliminary fair values consist of the following: (in thousands) Fair Value Useful Life Customer relationships $ 8 years Technology 3 years Trade name 10 years Non-compete agreements 2 - 5 years ​ ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pro Forma Results of Operations The following table presents the unaudited pro forma combined results of operations of Epiq and Iris for the years ended December 31, 2015 and 2014, after giving effect to certain pro forma adjustments including: (i) amortization of acquired intangible assets, (ii) the impact of acquisition-related expenses, and (iii) interest expense adjustment for historical long-term debt of Iris that was repaid and interest expense on additional borrowings by Epiq to fund the acquisition. Year Ended December 31, (in thousands) 2015 2014 Total revenues $ $ Net income (loss) ) ) The unaudited pro forma financial results assume that the Iris acquisition occurred on January 1, 2014 and are not necessarily indicative of the actual results that would have occurred had those transactions been completed on that date. Furthermore, they do not reflect the impacts of any potential operating efficiencies, savings from expected synergies, or costs to integrate the operations. The unaudited pro forma financial results are not necessarily indicative of the future results to be expected for the consolidated operations. Transaction costs related to the Iris acquisition were $2.5 million for fiscal year 2015 and are included in "Other operating income (expense)" in the Consolidated Statements of Operations. Debt financing costs associated with the Iris acquisition were $1.0 million for fiscal year 2015. Approximately $0.7 million of the debt financing costs were expensed and included in "Interest expense" in the Consolidated Statements of Operations. These expenses were included in the unaudited pro forma combined results of operations of Epiq and Iris in fiscal 2014. Acquisition of Minus 10 On April 1, 2014, we completed the acquisition of Minus 10, a company that develops and maintains software products and provides related services to its clients with respect to web-enabled bankruptcy preparation and case management and expanded our Chapter 11 restructuring service offerings. Minus 10 is included in our Bankruptcy and Settlement Administration segment. The purchase price of Minus 10 was comprised of the following: (in thousands) Cash paid at closing $ Net working capital liability Deferred cash consideration Fair value of contingent consideration ​ ​ ​ ​ ​ Total purchase price $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total purchase consideration was allocated to the identifiable intangible assets based on their respective fair values on the acquisition date. The purchase price allocation is summarized in the following table: (in thousands) Intangible assets: Acquired technology $ Goodwill ​ ​ ​ ​ ​ Net assets acquired $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The entire balances of goodwill and acquired technology related to Minus 10 are amortizable for tax purposes. Transaction costs related to Minus 10, which were expensed during the period in which they were incurred, were not material to the consolidated financial statements. The operating results of Minus 10 from the date of acquisition through December 31, 2014 were immaterial to our operating results. Pro-forma results of operations, assuming the Minus 10 acquisition was made at the beginning of the earliest period presented, have not been presented because the effect was not material to our consolidated operating results. See Note 9 to the Consolidated Financial Statement for additional information related to the Minus 10 contingent consideration obligation and the sale of our equity interest in Minus 10 during 2015. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 14: SEGMENT INFORMATION We report our financial performance based on the following two reportable segments: the Technology segment and the Bankruptcy and Settlement Administration segment. Our Technology segment provides eDiscovery services and technology solutions comprised of consulting, collections and forensics, processing, search and review, and document review to companies and law firms. Produced documents are made available primarily through a hosted environment utilizing our proprietary software and third-party software which allows for efficient attorney review and data requests. On April 30, 2015, we acquired Iris, a leading provider of managed services for the legal profession including electronic discovery and document review. Iris supports Epiq's strategic plan to offer managed services solutions to its existing global client base, while bringing Epiq's eDiscovery and document review resources to a new client base. The financial information of Iris is included in the Technology segment. Our Bankruptcy and Settlement Administration segment provides managed services and technology solutions that address the needs of our customers with respect to litigation, claims and project administration, compliance matters, controlled disbursements, corporate restructuring, bankruptcy and class action proceedings. The segment performance measure is based on earnings before interest, taxes, depreciation and amortization, certain nonrecurring operating expenses, and share-based compensation expense. In management's evaluation of performance, certain costs, such as compensation for administrative staff and executive management, as well as other enterprise level expenses are not allocated by segment and, accordingly, the following reporting segment results do not include such unallocated costs. Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property and equipment, leasehold improvements, software, identifiable intangible assets and goodwill. Cash, certain tax-related assets, and certain prepaid assets and other assets are not allocated to our segments. Although we can and do identify long-lived assets such as property and equipment, leasehold improvements, software, and identifiable intangible assets to reporting segments, we do not allocate the related depreciation and amortization to the segment as management evaluates segment performance exclusive of these non-cash charges. Following is a summary of segment information (in thousands): Year Ended December 31, 2015 Technology Bankruptcy and Settlement Administration Eliminations Total Operating revenue $ $ $ — $ Intersegment revenue — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues including intersegment revenue ) Reimbursable expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ) Direct costs, selling, general and administrative expenses ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment performance measure $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As a percentage of segment operating revenue % % % Year Ended December 31, 2014 Technology Bankruptcy and Settlement Administration Eliminations Total Operating revenue $ $ $ — $ Intersegment revenue — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues including intersegment revenue ) Reimbursable expenses — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ) Direct costs, selling, general and administrative expenses ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment performance measure $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As a percentage of segment operating revenue % % % Year Ended December 31, 2013 Technology Bankruptcy and Settlement Administration Eliminations Total Operating revenue $ $ $ — $ Intersegment revenue — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues including intersegment revenue ) Reimbursable expenses — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ) Direct costs, selling, general and administrative expenses ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment performance measure $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As a percentage of segment operating revenue % % % Following is a reconciliation of a segment performance measure to consolidated income (loss) before income taxes (in thousands): Year Ended December 31, 2015 2014 2013 Segment performance measure $ $ $ Unallocated expenses ) ) ) Share-based compensation expense ) ) ) Depreciation and software and leasehold amortization ) ) ) Amortization of identifiable intangible assets ) ) ) Intangible asset impairment expense ) — — Fair value adjustment to contingent consideration ) ) Other operating income (expense) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income Interest expense, net ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) before income taxes $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Following are capital expenditures (including software development costs) by segment (in thousands): Year Ended December 31, 2015 2014 2013 Capital Expenditures Technology $ $ $ Bankruptcy and Settlement Administration Unallocated and corporate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital expenditures (1) $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Excludes capital expenditures financed under long-term obligations such as capital leases and notes payable of $6.5 million, $4.9 million and $7.9 million for the years ended December 31, 2015, 2014 and 2013, respectively. Following are assets by segment (in thousands): As of December 31, 2015 2014 Total Assets Technology $ $ Bankruptcy and Settlement Administration Unallocated and corporate ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Following is total revenue, determined by the location providing the services, by geographical area (in thousands): Year Ended December 31, 2015 2014 2013 Total Revenue United States $ $ $ United Kingdom Other countries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Following are long-lived assets, excluding intangible assets, by geographical area (in thousands): As of December 31, 2015 2014 Long-lived assets United States $ $ Other countries ​ ​ ​ ​ ​ ​ ​ ​ Total long-lived assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant Client and Concentration of Credit Risk For the years ended December 31, 2015, 2014 and 2013, we had no clients which accounted for more than 10% of our consolidated revenue or consolidated accounts receivable as of December 31, 2015 and 2014. |
LEGAL PROCEEDINGS
LEGAL PROCEEDINGS | 12 Months Ended |
Dec. 31, 2015 | |
LEGAL PROCEEDINGS | |
LEGAL PROCEEDINGS | NOTE 15: LEGAL PROCEEDINGS We are at times involved in litigation and other legal claims in the ordinary course of business. When appropriate in management's estimation, we may record reserves in our financial statements for pending litigation and other claims. Although it is not possible to predict with certainty the outcome of litigation, we do not believe that any of the current pending legal proceedings to which we are a party will have a material impact on our results of operations, financial condition or cash flows. Villere Litigation On December 11, 2015, a petition was filed by Villere and George Young against Epiq and the following eight directors: Tom W. Olofson, Brad D. Scott, W. Bryan Satterlee, Edward M. Connolly, Jr., Charles C. Connely, IV, James A. Byrnes, Joel Pelofsky and Douglas M. Gaston, in the Circuit Court of Jackson County, Missouri. On January 5, 2016, the Plaintiffs amended the petition. The amended petition concerns Villere's December 7, 2015 purported nomination of six directors, which Epiq rejected, because, among other things, Villere is prohibited from nominating directors under the terms of the Director Appointment Agreement. In addition, Villere's purported nomination failed to comply with our amended and restated bylaws. Villere's amended petition includes claims for: (1) injunctive relief and (2) a declaratory judgement that its purported nomination was proper so that Villere can then submit such nominations for a vote at the annual meeting of shareholders in 2016. Epiq filed counterclaims against the Plaintiffs, and later amended such counterclaims to include certain clients of Villere on whose behalf Villere is purportedly operating. The Company's counterclaims include claims for (1) injunctive relief; (2) declaratory judgments that the Director Appointment Agreement was not validly terminated and Epiq's rejection of the purported nominations was proper; (3) breach of contract against Villere and certain of its clients in connection with the Director Appointment Agreement, and damages related thereto as a result of, among other things, Villere making numerous unauthorized public statements about Epiq; and (4) specific performance. Trial is scheduled to begin on April 4, 2016, relating to all claims and counterclaims except for Epiq's damages against Villere and certain of its clients for breach of the Director Appointment Agreement, which will be heard at a later date. Discovery is proceeding in the matter. See Item 1A "Risk Factors." |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 16: RELATED PARTY TRANSACTIONS On November 1, 2014, we entered into the Director Appointment Agreement. As a result, we created a new directorship and appointed Mr. Robert as a new independent director to our Board. We agreed to reimburse Villere's documented out-of-pocket expenses in connection with the appointment of Mr. Robert and during fiscal year 2015, we reimbursed an aggregate of $237,890 to Villere under this agreement. No additional payments are due and payable under the Director Appointment Agreement. Scott W. Olofson, the son of Tom W. Olofson, is our Senior Vice President, Corporate Relations and Business Development. The compensation committee of the Board approves all salary, bonus, equity incentive awards and perquisites for Scott W. Olofson. For 2015, Scott W. Olofson's compensation was $1.0 million. In February 2015, Scott W. Olofson was appointed head of our corporate restructuring group. |
SUPPLEMENTAL QUARTERLY FINANCIA
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited). | |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited) | NOTE 17: SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited) The following table sets forth the quarterly financial data for the quarters of the years ended December 31, 2015 and 2014 (in thousands, except per share amounts): First Second Third Fourth Fiscal Year Year ended December 31, 2015 Operating revenue $ $ $ $ $ Total revenue Gross profit (1) Net income (loss) ) ) ) Net income (loss) per share—Basic (2) ) ) ) Net income (loss) per share—Diluted (2) ) ) ) Year ended December 31, 2014 Operating revenue $ $ $ $ $ Total revenue Gross profit (1) Net income (loss) ) ) ) ) Net income (loss) per share—Basic (2) ) ) ) ) Net income (loss) per share—Diluted (2) ) ) ) ) (1) Gross profit is calculated as total revenue less direct cost of operating revenue, reimbursed direct costs, and the portion of depreciation and software amortization attributable to direct costs of services. (2) The sum of the quarters' net income per share may not equal the total of the respective year's net income (loss) per share as each quarter is calculated independently. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2015 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (in thousands) Additions Description Balance at beginning of year Charged to costs and expenses Charged to other accounts Deductions from reserves Balance at end of year Allowance for doubtful receivables: For the year ended December 31, 2015 $ $ ) $ — $ ) $ For the year ended December 31, 2014 $ $ $ — $ ) $ For the year ended December 31, 2013 $ $ $ — $ ) $ Additions Description Balance at beginning of year Charged to costs and expenses Charged to other accounts Deductions from reserves Balance at end of year Deferred tax valuation allowance: For the year ended December 31, 2015 $ $ $ $ ) $ For the year ended December 31, 2014 $ $ $ — $ ) $ For the year ended December 31, 2013 $ $ $ — $ ) $ |
NATURE OF OPERATIONS AND SUMM28
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of Epiq and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. See "Recently Issued Accounting Standards" included in Note 1 and Note 10 to the Consolidated Financial Statements for additional information. |
Use of Estimates | Use of Estimates The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the carrying amount of intangibles, goodwill, and valuation allowances for receivables, contingencies and deferred income tax assets. Actual results can, and often do, differ from those assumed in our estimates. |
Revenue Recognition | Revenue Recognition We have agreements with clients pursuant to which we deliver various services and solutions. Our significant sources of revenue are: · Fees contingent upon the month-to-month delivery of services defined by client contracts, such as claims processing, claims reconciliation, professional services, call center support, controlled disbursement services, project management, collection and forensic services, consulting services, document review services and conversion of data into an organized, searchable electronic database. The amount we earn varies based primarily on the size and complexity of the engagement, the number of hours of professional services provided and the number of documents or volume of data processed or reviewed. · Legal noticing services to parties of interest in bankruptcy, class action, federal regulatory action, data breach and other administrative matters including direct notification and media campaign and advertising management. · Data hosting fees and volume-based fees. · Fixed-fees related to our managed service eDiscovery solutions. · Monitoring and noticing fees earned based on monthly or on-demand requests for information provided through our AACER® software product. · Deposit-based fees earned based on a percentage of Chapter 7 assets placed on deposit with designated financial institutions by our trustee clients. Our trustee clients do not directly pay fees in connection with Chapter 7 related services. The fees earned are based on assets placed on deposit by our trustee clients and may vary based on fluctuations in short-term interest rates and changes in service fees assessed on such deposits. · Reimbursed expenses, primarily related to postage on mailing services and other pass-through expenses. Multiple Element Arrangements We have arrangements with clients pursuant to which we provide multiple elements of services that are billed based on unit prices and volumes for which we have identified each deliverable service element. Based on our evaluation of each element, we have determined that each element delivered has stand-alone value to our clients because we or other vendors sell such services separately from any other services and deliverables. However, we don't sell these services on a stand-alone basis in sufficient volumes to establish evidence of fair value. Therefore, we obtain objective and reliable evidence of the fair value of each element based on third-party evidence of similar services or, for elements where third-party evidence cannot be established, the best estimate of sales price has been used. Our arrangements do not include general rights of return. Accordingly, each of the service elements in our multiple element case and document management arrangements qualifies as a separate unit of accounting. We allocate revenue to the various units of accounting in our arrangements based on the fair value or best estimated selling price of each unit of accounting, which is generally consistent with the stated prices in our arrangements. In instances when revenue recognition is deferred, we utilize the relative selling price method to calculate the revenue recognized for each period. We recognize revenue for each service deliverable when the following criteria are satisfied: · we have evidence of an arrangement, · the services are rendered, · our fee becomes fixed and determinable, and · collectability is reasonably assured. Payments received in advance of satisfaction of the related revenue recognition criteria are recognized as a client deposit until all revenue recognition criteria have been satisfied. Reimbursements We have revenue related to reimbursable expenses, primarily postage. Reimbursable postage and other reimbursable expenses are recorded gross in the Consolidated Statements of Operations as "Reimbursable expenses" in the revenue and operating expenses sections. |
Costs Related to Contract Acquisition, Origination, and Set-up | Costs Related to Contract Acquisition, Origination, and Set-up We expense client contract acquisition, origination, and set-up costs as incurred. |
Share-Based Compensation | Share-Based Compensation We account for all share-based compensation in accordance with fair value accounting principles. Under this method, compensation expense is measured at the grant date fair value net of estimated forfeitures, and is recognized on a straight-line basis over the requisite service period. The grant date fair value of stock option awards is estimated using a Black-Scholes option-pricing model. The grant date fair value of nonvested share awards is the quoted market value of Epiq's common stock on the grant date. |
Income Taxes | Income Taxes The liability method is used in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law. Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. A valuation allowance is provided when, in the opinion of management, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Realization of the deferred tax assets is dependent on our ability to generate sufficient future taxable income and, if necessary, execution of our tax planning strategies. In the event we determine that sufficient future taxable income, taking into consideration tax planning strategies, may not generate sufficient taxable income to fully realize net deferred tax assets, we may be required to establish or increase valuation allowances by a charge to income tax expense in the period such a determination is made. We record uncertain tax positions on the basis of a two-step process whereby: (1) we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position; and (2) for those tax positions that meet the more likely than not recognition, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in income tax expense (benefit). Application of this guidance requires numerous estimates based on available information. We consider many factors when evaluating and estimating our tax positions and tax benefits, and our recognized tax positions and tax benefits may not accurately anticipate actual outcomes. As we obtain additional information, we may need to periodically adjust our recognized tax positions and tax benefits. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and in banks and all liquid investments with original maturities of three months or less at the time of purchase. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We maintain an allowance for doubtful accounts to reserve for potentially uncollectible receivables. We review accounts receivable to identify amounts due from clients which are past due to identify specific clients with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant clients based on ongoing credit evaluations. At December 31, 2015 and 2014, the allowance for doubtful accounts was $1.0 million and $4.0 million, respectively. |
Property and Equipment, Software and Leasehold Improvements | Property and Equipment, Software and Leasehold Improvements Property and equipment, including leasehold improvements and internal use, are stated at cost and depreciated or amortized on a straight-line basis over the estimated useful life of each asset or, for leasehold improvements, the lesser of the lease term or useful life. Depreciation expense is computed on the straight-line method over estimated useful lives as follows: Buildings and building improvements 30 years Leasehold improvements Life of lease or asset life if less Furniture and fixtures 5 - 7 years Computer equipment and purchased software 2 - 5 years Transportation equipment 3 - 7 years Operations equipment 3 - 7 years Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. We first evaluate recoverability of assets to be held and used by comparing the carrying amount of the asset to undiscounted expected future cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment loss recognized is the amount by which the carrying amount exceeds the fair value. |
Internally Developed Software | Internally Developed Software Certain internal software development costs incurred in the creation of computer software products for sale, lease or otherwise to be marketed are capitalized once technological feasibility has been established. Capitalized costs are amortized; beginning in the period the product is available for general release, based on the ratio of current revenue to current and estimated future revenue for each product with minimum annual amortization equal to the straight-line amortization over the remaining estimated economic life of the product. Certain internal software development costs incurred in the creation of computer software products for internal use are capitalized when the preliminary project phase is complete and when management, with the relevant authority, authorizes and commits funding to the project and it is probable the project will be completed and the software will be used to perform the function intended. Capitalized costs are amortized, beginning in the period each module or component of the product is ready for its intended use, on a straight-line basis over the estimated economic life of the product. Internally developed software is tested annually for impairment, or more often if an event occurs or circumstances change that would more likely than not reduce the net realizable value to less than its unamortized capitalized cost. |
Intangible Assets | Intangible Assets Identifiable intangible assets, resulting from various business acquisitions, consist of client relationships, agreements not to compete, technology, and trade names. We amortize the identifiable intangible assets over their estimated economic benefit period, generally from three to ten years. These definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances have indicated that the carrying amount of these assets might not be recoverable. If we were to determine that events and circumstances warrant a change to the estimate of an identifiable intangible asset's remaining useful life, then the remaining carrying amount of the identifiable intangible asset would be amortized prospectively over that revised remaining useful life. Additionally, information resulting from other events and circumstances may indicate that the carrying value of one or more identifiable intangible assets is not recoverable which would result in recognition of an impairment charge. During the second quarter of 2015, we recorded a noncash impairment charge of $1.0 million related to acquired technology assets resulting from the sale of Minus –10 Software, LLC ("Minus 10"). See Note 4 to the Consolidated Financial Statement for additional information. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in business combinations. We assess goodwill for impairment on at least an annual basis, as of July 31, at a reporting unit level and have identified our operating segments (Technology and Bankruptcy and Settlement Administration) as our reporting units for purposes of testing for goodwill impairment. When performing our goodwill impairment testing, the fair values of our reporting units are determined based on valuation techniques using the best available information, primarily discounted cash flow projections (income approach) and market multiples derived from a set of competitors or companies with comparable market characteristics (market approach). We make significant assumptions and estimates, which utilize Level 3 measures, about the extent and timing of future cash flows, which are dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. In addition, financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital, used to determine our discount rate, and through our stock price, used to determine our market capitalization. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit, and there can be no assurance that we will realize that value. As of July 31, 2015, which is the date of our most recent impairment test, the fair value of each of our reporting units was in excess of the carrying value of the reporting unit. Goodwill is assessed between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, a change in strategic direction, legal factors, operating performance indicators, a change in the competitive environment, the sale or disposition of a significant portion of a reporting unit, or future economic factors such as unfavorable changes in our stock price and market capitalization or unfavorable changes in the estimated future discounted cash flows of our reporting units. During the second quarter of 2015, we recorded a goodwill impairment charge of $0.2 million resulting from the sale of Minus 10. See Note 4 to the Consolidated Financial Statement for additional information. As of December 31, 2015, there have been no events since our last annual test to indicate that it is more likely than not that the recorded goodwill balance had become impaired. Our consolidated goodwill totaled $477.5 million as of December 31, 2015. |
Debt Issuance Costs | Debt Issuance Costs Incremental, third-party costs related to establishing debt arrangements are capitalized and amortized based on the terms of the related debt. The unamortized costs related to our senior secured revolving credit facility are included in "Other long-term assets" on our Consolidated Balance Sheets. All other unamortized debt issuance costs are included as a direct deduction from "Long-term obligations" on our Consolidated Balance Sheets. Amortization of debt issuance costs is included in "Interest expense" on our Consolidated Statements of Operations. |
Derivative Instruments | Derivative Instruments We may use derivative financial instruments as part of our risk management strategy to reduce our interest rate exposure. We do not enter into derivative financial instruments for speculative or trading purposes. Derivatives are measured at fair value and recorded on the balance sheet as either assets or liabilities. Changes in the fair value of derivatives are recorded either through current earnings or comprehensive income (loss), depending on hedge designation. Gains and losses on derivative instruments classified as cash flow hedges are reported in comprehensive income and are reclassified into earnings in the periods in which earnings are impacted by the variability of the cash flow of the hedged item. The ineffective portion of all hedge transactions is recognized in current period earnings. |
Foreign Currency Translation | Foreign Currency Translation Local currencies are the functional currencies for our operating subsidiaries. Accordingly, assets and liabilities of these subsidiaries are translated at the rate of exchange at the balance sheet date. Adjustments from the translation process are part of accumulated other comprehensive income (loss) and are included as a separate component of equity. Income and expense items of significant value are translated as of the date of the transactions for these subsidiaries; however, day to day operational transactions are translated at average rates of exchange. As of December 31, 2015 and 2014, cumulative translation adjustments included in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets were $5.2 million and $3.0 million, respectively. |
Business Combinations | Business Combinations Accounting for the acquisition of a business requires us to determine the fair value of all assets acquired, including identifiable intangible assets, liabilities assumed, and contingent consideration obligations. The purchase consideration of the acquisition is allocated to these assets and liabilities in amounts equal to the estimated fair value of each asset and liability, and any remaining purchase consideration is classified as goodwill. This allocation process requires the use of estimates and assumptions, including quoted market prices and estimates of future cash flows to be generated by the acquired assets. We include the results of operations of the businesses that we acquire as of the respective dates of acquisition. Acquisition-related costs for potential and completed acquisitions are expensed, as incurred, and are included in "Other operating income (expense)" on our Consolidated Statements of Operations. |
Contingencies | Contingencies We may be involved in various legal proceedings from time to time in the ordinary course of business. Except for income tax contingencies, we record accruals for contingencies to the extent that we conclude their occurrence is probable and the related liability can be reasonably estimated. We record anticipated recoveries under existing insurance contracts when we are assured of recovery. Many factors are considered when making these assessments, including the progress of the case, opinions or views of legal counsel, prior case law, our experience or the experience of other companies with similar cases, and our intent on how to respond. Litigation and other contingencies are inherently unpredictable and excessive damage awards do occur. As such, these assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board (the "FASB") issued accounting standard update ("ASU") No. 2016-02, Leases (Topic 842). This new lease guidance requires that an entity should recognize assets and liabilities for leases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term. Leases would be classified as either Type A leases (generally today's capital leases) or Type B leases (generally today's operating leases). For certain leases of assets other than property (for example, equipment, aircraft, cars, trucks), a lessee would classify the lease as a Type A lease and would do the following: (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of lease payments and (2) recognize the unwinding of the discount on the lease liability as interest separately from the amortization of the right-of-use asset. For certain leases of property (that is, land and/or a building or part of a building), a lessee would classify the lease as a Type B lease and would do the following: (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of lease payments and (2) recognize a single lease cost, combining the unwinding of the discount on the lease liability with the amortization of the right-of-use asset, on a straight-line basis. This guidance also provides accounting updates with respect a lessor accounting under a lease arrangement. Historically, we have not engaged in the business of leasing assets to third parties. This new lease guidance is effective for Epiq beginning in the first quarter of fiscal 2019. Entities have the option of using either a full retrospective or a modified approach (cumulative effect adjustment in period of adoption) to adopt the new guidance. Early adoption is permitted for all entities. We are currently assessing the full impact of this new guidance on our consolidated financial position, results of operations and cash flows, however, due to the magnitude of our operating leases and related rent expense, we expect the adoption of this accounting guidance to have a material effect on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): "Balance Sheet Classification of Deferred Taxes". Under this guidance, entities are required to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. This guidance is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. Entities are permitted to adopt this guidance either prospectively or retrospectively. We elected to early adopt this guidance retrospectively in the fourth quarter of 2015, and as a result, $4.6 million of current deferred tax assets on our December 31, 2014 Consolidated Balance Sheet was reclassified from current assets to a direct reduction of long-term deferred income tax liabilities. The adoption of this guidance did not affect our results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, Interest—Imputation of Interest: "Simplifying the Presentation of Debt Issuance Costs" (ASU 2015-03), which requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Since ASU 2015-03 does not address deferred issuance costs for line-of-credit arrangements, in August 2015, the FASB issued ASU No. 2015-15, "Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" (ASU 2015-15). ASU 2015-15 allows an entity to defer debt issuance costs associated with line-of-credit arrangements, including arrangements with no outstanding borrowings, classify them as an asset, and amortize them over the term of the arrangements. ASU 2015-03 and ASU 2015-15 are effective retrospectively for annual and interim periods beginning after December 15, 2015, with early adoption permitted. We elected to early adopt this guidance in the fourth quarter of 2015, and as a result, reclassification of debt issuance costs related to our senior secured term loan resulted in reductions in "Other long-term assets" and "Long-term obligations" of $5.3 million and $5.7 million as of December 31, 2015 and 2014, respectively. The adoption of this guidance did not affect our results of operations or cash flows. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): "Simplifying the Accounting for Measurement-Period Adjustments", which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Under this guidance, acquirers must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This guidance is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted. We elected to early adopt this guidance in the third quarter of 2015. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", which supersedes the revenue recognition requirements in Accounting Standards Codification 605, Revenue Recognition. This new revenue guidance outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most of the current revenue recognition guidance. The new guidance requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contract with a customer, (2) identify the performance obligations under the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations under the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance also provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. This new revenue guidance was going to be effective for Epiq beginning in the first quarter of fiscal 2017. In August 2015, the FASB deferred the effective date by one year. Early adoption as of the original effective date will be permitted. Entities have the option of using either a full retrospective or a modified approach (cumulative effect adjustment in period of adoption) to adopt the new guidance. We are currently assessing the impact of this new revenue guidance on our consolidated financial position, results of operations and cash flows and will adopt this new guidance effective January 1, 2018. |
NATURE OF OPERATIONS AND SUMM29
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of estimated useful lives used to compute depreciation expense | Buildings and building improvements 30 years Leasehold improvements Life of lease or asset life if less Furniture and fixtures 5 - 7 years Computer equipment and purchased software 2 - 5 years Transportation equipment 3 - 7 years Operations equipment 3 - 7 years |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT | |
Schedule of classification of property and equipment | The classification of property and equipment is as follows (in thousands): December 31, 2015 2014 Land $ $ Buildings and building and leasehold improvements Furniture and fixtures Computer equipment and purchased software Transportation equipment Operations equipment Construction in progress ​ ​ ​ ​ ​ ​ ​ ​ Accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ Property and equipment, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
INTERNALLY DEVELOPED SOFTWARE (
INTERNALLY DEVELOPED SOFTWARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INTERNALLY DEVELOPED SOFTWARE | |
Summary of change in the carrying amount of internally developed software | The change in the carrying amount of internally developed software costs is as follows (in thousands): Year Ended December 31, 2015 2014 Amounts capitalized, beginning of year $ $ Development costs capitalized Dispositions ) ) ​ ​ ​ ​ ​ ​ ​ ​ Amounts capitalized, end of year Accumulated amortization, end of year ) ) ​ ​ ​ ​ ​ ​ ​ ​ Internally developed software, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill for the years ended December 31, 2015 and 2014 was as follows (in thousands): Technology Bankruptcy and Settlement Administration Total Balance as of December 31, 2013 $ $ $ Acquisition — Foreign currency translation and other ) — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2014 Acquisition — Impairment — ) ) Foreign currency translation and other ) — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2015 $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of Identifiable intangible assets | Identifiable intangible assets as of December 31, 2015 and 2014 consisted of the following (in thousands): December 31, 2015 December 31, 2014 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizing intangible assets: Client relationships $ $ $ $ Trade names Technology Non-compete agreements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of estimated future amortization expense related to intangible assets | The following table presents the estimated future amortization expense related to amortizing intangible assets held at December 31, 2015 (in thousands): Year Ending December 31, Future Amortization Expense 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
LONG-TERM OBLIGATIONS (Tables)
LONG-TERM OBLIGATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
LONG-TERM OBLIGATIONS | |
Summary of long-term obligations | Long-term obligations consisted of the following (in thousands): As of December 31, 2015 As of December 31, 2014 Principal Unamortized Debt Issuance Costs Principal Unamortized Debt Issuance Costs Senior secured term loan, variable interest rate, due 2020 $ $ ) $ $ ) Capital leases, due various dates from 2016 to 2021 — — Notes payable, 2.20%, due 2017 — — Acquisition-related liabilities — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total obligations ) ) Less: Obligations due within one year — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term obligations $ $ ) $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of acquisition-related liabilities | Acquisition-related liabilities consisted of the following (in thousands): December 31, 2014 Minus 10 deferred acquisition price $ Minus 10 contingent consideration ​ ​ ​ ​ ​ Total acquisition-related liabilities $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of maturity of long-term obligations outstanding | The annual maturities of long-term obligations for the next five fiscal years and thereafter are as follows (in thousands): Capital Leases Year Ending December 31, Credit Agreement Minimum Lease Payments Less Interest Principal Amount Note Payable Total Principal Payments 2016 $ $ $ ) $ $ $ 2017 ) 2018 ) — 2019 ) — 2020 ) — Thereafter — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ ) $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
OPERATING LEASES | |
Schedule of future minimum lease payments | Future minimum lease payments for the next five fiscals years and thereafter are as follows (in thousands): Year Ending December 31, Total Future Minimum Lease Payments 2016 $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
EQUITY | |
Schedule of Accumulated other comprehensive loss | The following table summarizes the components of Accumulated other comprehensive loss (in thousands): Year Ended December 31, 2015 2014 2013 Foreign currency translation adjustments Balance at beginning of period $ ) $ ) $ ) Other comprehensive income (loss), net of tax ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at end of period $ ) $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized loss on cash flow hedges Balance at beginning of period $ ) $ — $ — Other comprehensive loss, net of tax ) ) — Reclassification adjustments, net of tax — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at end of period $ ) $ ) $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE MEASUREMENTS | |
Schedule of assets and liabilities measured and recorded at fair value on a recurring basis | As of December 31, 2015 and 2014, our assets and liabilities that are measured and recorded at fair value on a recurring basis were as follows (in thousands): Fair Value Measurements Quoted Prices in Active Markets Significant Other Observable Inputs Significant Unobservable Inputs Carrying Value (Level 1) (Level 2) (Level 3) December 31, 2015: Liabilities: Interest rate swap $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2014: Assets: Interest rate cap $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: Interest rate swap $ $ — $ $ — Acquisition-related contingent consideration — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Liabilities $ $ — $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of change in the acquisition-related contingent consideration | The following table represents the change in the acquisition-related contingent consideration obligation during the years ended December 31, 2015 and 2014 (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) 2015 2014 Beginning balance January 1 $ $ Present value accretion Payments ) ) Fair value related adjustments ) ​ ​ ​ ​ ​ ​ ​ ​ Ending balance December 31 $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES | |
Schedule of income (loss) before income taxes | Income (loss) before income taxes consists of the following (in thousands): Year Ended December 31, 2015 2014 2013 Income (loss) before income taxes United States $ ) $ ) $ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of income tax expense (benefit) | Income tax expense (benefit) for 2015, 2014 and 2013 consists of the following (in thousands): Year Ended December 31, 2015 2014 2013 Current: Federal $ ) $ ) $ State ) ) Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total current ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred: Federal ) State ) ) Foreign ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total deferred ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total income tax expense (benefit) $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of income tax expense (benefit) and resulting effective tax rate by jurisdiction | The following is a summary of our income tax expense (benefit) and resulting effective tax rate by jurisdiction (in thousands): Year Ended December 31, 2015 2014 2013 Income tax expense (benefit) by jurisdiction: United States $ $ ) $ Foreign ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated income tax expense (benefit) $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective income tax rate by jurisdiction: United States )% % % Foreign % % % Consolidated effective tax rate % % % |
Schedule of reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | A reconciliation of the provision for income taxes at the statutory rate of 35% to the provision for income taxes at our effective rate is shown below (in thousands): Year Ended December 31, 2015 2014 2013 Income tax expense (benefit) at the statutory rate $ $ ) $ Change in taxes resulting from: Valuation allowances State income taxes, net of federal tax effect ) ) Foreign income taxes ) ) ) Permanent differences Uncertain tax positions ) ) Research and development credits ) ) ) Nondeductible compensation ) — Share-based compensation — Domestic production activities deduction — ) ) Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total income tax expense (benefit) $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands): As of December 31, 2015 2014 Deferred tax assets: (1) U.S. net operating loss carryforwards $ $ Foreign net operating loss carryforwards Income tax credit carryforwards Share-based compensation Intangible assets Deferred rent Accrued liabilities Cash flow hedges Allowance for doubtful accounts Other Valuation allowances ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax assets ​ ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: (1) Prepaid expenses ) ) Goodwill ) ) Property and equipment and software development costs ) ) Deferred debt discharge income ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total deferred tax liabilities ) ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liability $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Temporary differences related to net operating loss carryforwards, income tax credit carryforwards, intangible assets and goodwill as of December 31, 2014 have been reclassified to conform to current year presentation. |
Schedule of net deferred tax liability | The net deferred tax liability is presented on the Consolidated Balance Sheets as follows (in thousands): As of December 31, 2015 2014 Other long-term assets $ $ Long-term deferred income tax liability ) ) ​ ​ ​ ​ ​ ​ ​ ​ Net deferred tax liability $ ) $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of loss carryforwards | The loss carryforwards expire as follows (in thousands): Calendar Years Amount 2016 - 2020 $ 2021 - 2025 2026 - 2030 2031 - 2035 ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Summary of the activity related to gross unrecognized tax benefits excluding interest and penalties | The following table summarizes the activity related to our gross unrecognized tax benefits excluding interest and penalties (in thousands): 2015 2014 2013 Unrecognized tax benefits as of January 1 $ $ $ Gross increases for prior year tax positions Gross decreases for prior year tax positions — ) ) Gross increase for current year tax positions Settlements — — ) Lapse of statute of limitations ) ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrecognized tax benefits at December 31 $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted net income per share | The following table summarizes basic and diluted earnings per share or the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts). For the Year Ended 2015 2014 2013 Net income (loss) $ ) $ ) $ Less: amounts allocated to nonvested shares — — ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income available to common stockholders $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding: Basic common shares Effect of dilutive securities — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted common shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per common share: Basic net income (loss) per common share $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted net income (loss) per common share $ ) $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SHARE-BASED COMPENSATION. | |
Schedule of share-based compensation expense | The following table presents total share-based compensation expense (in thousands): Year Ended December 31, 2015 2014 2013 Direct cost of services $ $ $ Selling, general and administrative expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total share-based compensation expense $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of weighted-average assumptions used and the weighted-average fair value per option granted | Year Ended December 31, 2015 2014 Expected life of stock option in years Expected volatility % % Risk-free interest rate % % Dividend yield % % Weighted average grant-date fair value $ $ |
Summary of option activity | A summary of option activity during the year ended December 31, 2015 is presented below (shares and aggregate intrinsic value in thousands): Shares Weighted Average Exercise Price Weighted Average Contractual Term Aggregate Intrinsic Value Outstanding, beginning of period $ Granted Exercised ) Forfeited and expired ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, end of period $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options vested and expected to vest, end of period $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options exercisable, end of period $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of additional information regarding stock option exercises | Additional information regarding stock option exercises appears in the table below (in thousands): As of December 31, 2015 2014 2013 Intrinsic value of stock options exercised $ $ $ Cash proceeds from option exercises Tax benefit realized from options exercised during the annual period |
Summary of non-vested restricted stock activity | Summary restricted stock activity is presented in the table below (shares in thousands): Shares Weighted Average Grant Date Fair Value Non-vested at December 31, 2014 $ Granted Vested ) Forfeited/Canceled ) ​ ​ ​ ​ ​ ​ ​ ​ Non-vested at December 31, 2015 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Iris Data Services Inc | |
Acquisitions | |
Schedule of the purchase price of acquisition and the preliminary estimated fair values of the assets acquired and liabilities assumed | (in thousands) Original Allocation (1) Allocation Adjustments Adjusted Allocation (3) Cash and cash equivalents $ $ — $ Accounts receivable ) Other current assets ) Deferred income tax assets ) (2) Property and equipment — Other long-term assets — Intangible assets — Goodwill ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets acquired ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable Accrued liabilities ) Deferred revenue Deferred income tax liabilities ) (2) — Capital lease obligations — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities assumed ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net assets acquired $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Represents the preliminary allocation of assets acquired and liabilities assumed as of the acquisition date reported in our June 30, 2015 Form 10-Q. (2) Includes the impact of reclassifying current deferred income tax assets and liabilities as non-current in accordance with the retroactive adoption of ASU 2015-17 during the fourth quarter of 2015 and the related netting of deferred income tax assets with deferred income tax liabilities by income tax jurisdiction. (3) Represents the final allocation of assets acquired and liabilities assumed as of the acquisition date. |
Schedule of fair value of intangible assets acquired | (in thousands) Fair Value Useful Life Customer relationships $ 8 years Technology 3 years Trade name 10 years Non-compete agreements 2 - 5 years ​ ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of unaudited pro forma combined result of operations | Year Ended December 31, (in thousands) 2015 2014 Total revenues $ $ Net income (loss) ) ) |
Minus - 10 | |
Acquisitions | |
Schedule of the purchase price of acquisition and the preliminary estimated fair values of the assets acquired and liabilities assumed | (in thousands) Cash paid at closing $ Net working capital liability Deferred cash consideration Fair value of contingent consideration ​ ​ ​ ​ ​ Total purchase price $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of fair value of intangible assets acquired | (in thousands) Intangible assets: Acquired technology $ Goodwill ​ ​ ​ ​ ​ Net assets acquired $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SEGMENT INFORMATION | |
Summary of segment information | Following is a summary of segment information (in thousands): Year Ended December 31, 2015 Technology Bankruptcy and Settlement Administration Eliminations Total Operating revenue $ $ $ — $ Intersegment revenue — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues including intersegment revenue ) Reimbursable expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ) Direct costs, selling, general and administrative expenses ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment performance measure $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As a percentage of segment operating revenue % % % Year Ended December 31, 2014 Technology Bankruptcy and Settlement Administration Eliminations Total Operating revenue $ $ $ — $ Intersegment revenue — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues including intersegment revenue ) Reimbursable expenses — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ) Direct costs, selling, general and administrative expenses ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment performance measure $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As a percentage of segment operating revenue % % % Year Ended December 31, 2013 Technology Bankruptcy and Settlement Administration Eliminations Total Operating revenue $ $ $ — $ Intersegment revenue — ) — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues including intersegment revenue ) Reimbursable expenses — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue ) Direct costs, selling, general and administrative expenses ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment performance measure $ $ $ — $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As a percentage of segment operating revenue % % % |
Schedule of reconciliation of segment performance measure to consolidated income (loss) before income taxes | Following is a reconciliation of a segment performance measure to consolidated income (loss) before income taxes (in thousands): Year Ended December 31, 2015 2014 2013 Segment performance measure $ $ $ Unallocated expenses ) ) ) Share-based compensation expense ) ) ) Depreciation and software and leasehold amortization ) ) ) Amortization of identifiable intangible assets ) ) ) Intangible asset impairment expense ) — — Fair value adjustment to contingent consideration ) ) Other operating income (expense) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income Interest expense, net ) ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income (loss) before income taxes $ $ ) $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of capital expenditures (including software development costs) by segment | Following are capital expenditures (including software development costs) by segment (in thousands): Year Ended December 31, 2015 2014 2013 Capital Expenditures Technology $ $ $ Bankruptcy and Settlement Administration Unallocated and corporate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital expenditures (1) $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Excludes capital expenditures financed under long-term obligations such as capital leases and notes payable of $6.5 million, $4.9 million and $7.9 million for the years ended December 31, 2015, 2014 and 2013, respectively. |
Schedule of total assets by segment | Following are assets by segment (in thousands): As of December 31, 2015 2014 Total Assets Technology $ $ Bankruptcy and Settlement Administration Unallocated and corporate ​ ​ ​ ​ ​ ​ ​ ​ Total assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of revenue, determined by the location providing the services, by geographical area | Following is total revenue, determined by the location providing the services, by geographical area (in thousands): Year Ended December 31, 2015 2014 2013 Total Revenue United States $ $ $ United Kingdom Other countries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total revenue $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of long-lived assets, excluding intangible assets, by geographical area | Following are long-lived assets, excluding intangible assets, by geographical area (in thousands): As of December 31, 2015 2014 Long-lived assets United States $ $ Other countries ​ ​ ​ ​ ​ ​ ​ ​ Total long-lived assets $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
SUPPLEMENTAL QUARTERLY FINANC42
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited). | |
Schedule of quarterly financial data | The following table sets forth the quarterly financial data for the quarters of the years ended December 31, 2015 and 2014 (in thousands, except per share amounts): First Second Third Fourth Fiscal Year Year ended December 31, 2015 Operating revenue $ $ $ $ $ Total revenue Gross profit (1) Net income (loss) ) ) ) Net income (loss) per share—Basic (2) ) ) ) Net income (loss) per share—Diluted (2) ) ) ) Year ended December 31, 2014 Operating revenue $ $ $ $ $ Total revenue Gross profit (1) Net income (loss) ) ) ) ) Net income (loss) per share—Basic (2) ) ) ) ) Net income (loss) per share—Diluted (2) ) ) ) ) (1) Gross profit is calculated as total revenue less direct cost of operating revenue, reimbursed direct costs, and the portion of depreciation and software amortization attributable to direct costs of services. (2) The sum of the quarters' net income per share may not equal the total of the respective year's net income (loss) per share as each quarter is calculated independently. |
NATURE OF OPERATIONS AND SUMM43
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - General (Details ) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill | ||||
Goodwill impairment charge | $ 153 | |||
Goodwill | 477,479 | $ 404,187 | $ 404,302 | |
Intangible Assets | ||||
Impairment of identifiable intangible assets | $ 1,000 | |||
Accounts Receivable | ||||
Allowance for doubtful accounts | 1,000 | 4,000 | ||
Depreciation and Software and Leasehold Amortization | ||||
Depreciation, Internally Developed Software, Amortization and Leasehold Amortization | 37,810 | 36,042 | $ 30,971 | |
Foreign Currency Translation | ||||
Cumulative translation adjustments included in accumulated other comprehensive loss | $ 5,200 | $ 3,000 | ||
Building and Building Improvements | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 30 years | |||
Minimum | Furniture and fixtures | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 5 years | |||
Minimum | Computer equipment and purchased software | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 2 years | |||
Minimum | Transportation equipment | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 3 years | |||
Minimum | Operations equipment | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 3 years | |||
Maximum | Furniture and fixtures | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 7 years | |||
Maximum | Computer equipment and purchased software | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 5 years | |||
Maximum | Transportation equipment | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 7 years | |||
Maximum | Operations equipment | ||||
Property and Equipment, Software and Leasehold Improvements | ||||
Estimated Useful Life | 7 years | |||
Minus - 10 | ||||
Goodwill | ||||
Goodwill impairment charge | $ 200 |
NATURE OF OPERATIONS AND SUMM44
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other long-term assets | $ 10,746 | $ 14,318 |
Long-term deferred income tax liability | 47,036 | 30,025 |
Long-term obligations | 371,365 | 296,819 |
Accounting Standards Update 2015-17 | Adjustments for New Accounting Principle, Early Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Current deferred tax asset | 4,600 | |
Long-term deferred income tax liability | 4,600 | |
Accounting Standards Update 2015-03 | Adjustments for New Accounting Principle, Early Adoption | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Other long-term assets | 5,300 | 5,700 |
Long-term obligations | $ 5,300 | $ 5,700 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 197,789 | $ 180,396 | |
Accumulated depreciation and amortization | (120,074) | (109,817) | |
Property and equipment, net | 77,715 | 70,579 | |
Depreciation and software and leasehold amortization | 37,800 | 36,000 | $ 31,000 |
Land | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 1,247 | 1,247 | |
Building and building and leasehold improvements | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 24,040 | 23,428 | |
Furniture and fixtures | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 10,002 | 8,796 | |
Computer equipment and purchased software | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 141,871 | 131,229 | |
Assets acquired under capital leases | 14,900 | 8,400 | |
Accumulated amortization | 7,300 | 4,000 | |
Transportation equipment | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 5,027 | 5,027 | |
Operations equipment | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 9,979 | 6,267 | |
Construction in progress | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 5,623 | $ 4,402 |
INTERNALLY DEVELOPED SOFTWARE46
INTERNALLY DEVELOPED SOFTWARE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Capitalized software development costs | |||
Amounts capitalized, beginning of year | $ 75,972 | $ 68,862 | |
Development costs capitalized | 9,544 | 7,154 | |
Dispositions | (1,974) | (44) | |
Amounts capitalized, end of year | 83,542 | 75,972 | $ 68,862 |
Accumulated amortization, end of year | (67,571) | (61,259) | |
Internally developed software, net | 15,971 | 14,713 | |
Capitalized software development costs for projects in progress | 4,700 | 1,000 | |
Amortization expense recognized related to capitalized software development costs | $ 8,300 | $ 8,600 | $ 8,800 |
GOODWILL AND INTANGIBLE ASSET47
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Change in the carrying amount of goodwill | ||
Balance at the beginning of period | $ 404,187 | $ 404,302 |
Acquisitions | 73,676 | 153 |
Impairment | (153) | |
Foreign currency translation and other | (231) | (268) |
Balance at the end of period | 477,479 | 404,187 |
Technology | ||
Change in the carrying amount of goodwill | ||
Balance at the beginning of period | 189,071 | 189,339 |
Acquisitions | 73,676 | |
Foreign currency translation and other | (231) | (268) |
Balance at the end of period | 262,516 | 189,071 |
Bankruptcy and Settlement Administration Segment | ||
Change in the carrying amount of goodwill | ||
Balance at the beginning of period | 215,116 | 214,963 |
Acquisitions | 153 | |
Impairment | (153) | |
Balance at the end of period | $ 214,963 | $ 215,116 |
GOODWILL AND INTANGIBLE ASSET48
GOODWILL AND INTANGIBLE ASSETS - Identifiable Intangible (Details) - USD ($) $ in Thousands | Apr. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Amortizing and Non-amortizing intangible assets | ||||
Gross Carrying Amount | $ 184,744 | $ 151,192 | ||
Accumulated Amortization | 139,801 | 121,587 | ||
Other Finite Lived Intangible Assets, Amortization Expense | 18,347 | 12,655 | $ 18,834 | |
Customer relationships | ||||
Amortizing and Non-amortizing intangible assets | ||||
Gross Carrying Amount | 139,912 | 124,512 | ||
Accumulated Amortization | $ 111,473 | 100,840 | ||
Weighted average life | 8 years | |||
Customer relationships | Weighted Average | ||||
Amortizing and Non-amortizing intangible assets | ||||
Weighted average life | 8 years | |||
Trade names | ||||
Amortizing and Non-amortizing intangible assets | ||||
Gross Carrying Amount | $ 13,591 | 6,591 | ||
Accumulated Amortization | $ 5,087 | 3,312 | ||
Weighted average life | 10 years | |||
Trade names | Weighted Average | ||||
Amortizing and Non-amortizing intangible assets | ||||
Weighted average life | 10 years | |||
Acquired Technology | ||||
Amortizing and Non-amortizing intangible assets | ||||
Gross Carrying Amount | $ 8,400 | 1,142 | ||
Accumulated Amortization | $ 3,774 | 86 | ||
Acquired Technology | Weighted Average | ||||
Amortizing and Non-amortizing intangible assets | ||||
Weighted average life | 3 years | |||
Non-compete agreements | ||||
Amortizing and Non-amortizing intangible assets | ||||
Gross Carrying Amount | $ 22,841 | 18,947 | ||
Accumulated Amortization | $ 19,467 | $ 17,349 | ||
Non-compete agreements | Weighted Average | ||||
Amortizing and Non-amortizing intangible assets | ||||
Weighted average life | 5 years |
GOODWILL AND INTANGIBLE ASSET49
GOODWILL AND INTANGIBLE ASSETS - Expenses and Impairment (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Rolling Maturity [Abstract] | |||
2,016 | $ 14,870 | ||
2,017 | 10,586 | ||
2,018 | 6,817 | ||
2,019 | 5,154 | ||
2,020 | 2,192 | ||
Thereafter | 5,324 | ||
Total | 44,943 | $ 29,605 | |
Impairment of goodwill and identifiable intangible assets | |||
Goodwill and Intangible Asset Impairment | $ 1,162 | ||
Minus - 10 | |||
Impairment of goodwill and identifiable intangible assets | |||
Equity interest sold | 100.00% |
LONG-TERM OBLIGATIONS - General
LONG-TERM OBLIGATIONS - General (Details) | Apr. 30, 2015USD ($)item | Jan. 26, 2015 | Mar. 26, 2014 | Nov. 30, 2014 | Apr. 30, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Apr. 01, 2014USD ($) | Aug. 27, 2013USD ($) |
LONG-TERM OBLIGATIONS | |||||||||
Unamortized debt issuance expense | $ (5,264,000) | $ (5,703,000) | |||||||
Less: Obligations due within one year | 12,213,000 | 10,959,000 | |||||||
Long-term obligations | 371,365,000 | 296,819,000 | |||||||
Long-term obligations, principal | 388,842,000 | 313,481,000 | |||||||
Long-term unamortized debt issuance expense | (5,264,000) | (5,703,000) | |||||||
Interest rate swap | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Changes in fair value of derivative included in accumulated other comprehensive income | 1,400,000 | 2,500,000 | |||||||
Fair value of the interest rate swap, liability | $ 3,900,000 | 2,500,000 | |||||||
Minus - 10 | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Fair value of contingent consideration | $ 933,000 | ||||||||
Contingent consideration liability, discount rate (as a percent) | 25.00% | ||||||||
Credit Agreement | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Aggregate amount of funds available | $ 475,000,000 | $ 400,000,000 | |||||||
Increase in loan provided by uncommitted accordion | 200,000,000 | ||||||||
Reduction in term loan interest rate (as a percent) | 0.50% | ||||||||
Net leverage ratio, maximum | 4.50 | ||||||||
Mandatory prepayment leverage ratio, minimum | 2.75 | ||||||||
Maximum percentage of net income that can be paid as dividends and repurchase securities | 50.00% | ||||||||
Mandatory prepayments outstanding | $ 0 | ||||||||
Senior secured term loan | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Unamortized debt issuance expense | (5,264,000) | (5,703,000) | |||||||
Long-term obligations, principal | 367,213,000 | $ 296,250,000 | |||||||
Principal amount of debt issued | 375,000,000 | 300,000,000 | |||||||
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | 500,000,000 | ||||||||
Payments of the principal amount of debt quarterly | $ 900,000 | ||||||||
Increase in borrowing capacity | $ 75,000,000 | ||||||||
Number of quarterly repayments | item | 21 | ||||||||
Senior secured term loan | Interest rate cap | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Term of derivative contract | 2 years | ||||||||
Notional amount | $ 150,000,000 | ||||||||
Strike rate (as a percent) | 3.00% | ||||||||
Ineffectiveness gain (loss) recognized in earnings | $ 0 | ||||||||
Senior secured term loan | Interest rate swap | Forward | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Notional amount | $ 73,700,000 | ||||||||
Strike rate (as a percent) | 2.81% | ||||||||
Basis spread on variable rate basis, floor | 0.75% | ||||||||
Senior secured term loan | Prime rate | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Basis points added to reference rate (as a percent) | 2.75% | 2.50% | |||||||
Variable interest rate basis | prime rate | ||||||||
Interest rate, variable interest rate floor | 1.75% | 1.75% | |||||||
Senior secured term loan | LIBOR | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Basis points added to reference rate (as a percent) | 3.75% | 3.50% | 3.75% | ||||||
Variable interest rate basis | one, two, three or six month LIBOR | one, two, three or six month LIBOR | LIBOR | ||||||
Interest rate, variable interest rate floor | 0.75% | 0.75% | 0.75% | ||||||
Aggregate floating rate (as a percent) | 4.50% | 4.25% | 4.50% | ||||||
Senior secured revolving loan | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Aggregate amount of funds available | $ 100,000,000 | 100,000,000 | |||||||
Line of credit amount outstanding | 0 | ||||||||
Maximum borrowing capacity subject at the entity's option, subject to compliance with covenants | $ 200,000,000 | ||||||||
Capital leases, due various dates from 2016 to 2021 | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Long-term obligations, principal | $ 13,326,000 | $ 3,177,000 | |||||||
Weighted average interest rate (as a percent) | 4.64% | ||||||||
Notes payable, 2.20%, due 2017 | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Long-term obligations, principal | $ 8,303,000 | 12,895,000 | |||||||
Interest rate bearing notes payable (as a percent) | 2.20% | ||||||||
Acquisition-related liabilities | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Total obligations | 1,159,000 | ||||||||
Long-term obligations, principal | 1,159,000 | ||||||||
Contingent consideration | Minus - 10 | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Less: Obligations due within one year | 1,116,000 | ||||||||
Deferred acquisition price | Minus - 10 | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Total obligations | $ 43,000 | ||||||||
Letters of credit | |||||||||
LONG-TERM OBLIGATIONS | |||||||||
Letters of credit amount outstanding | $ 800,000 |
LONG-TERM OBLIGATIONS - Maturit
LONG-TERM OBLIGATIONS - Maturities (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Total Principal Payments | |
2,016 | $ 12,213 |
2,017 | 10,639 |
2,018 | 6,185 |
2,019 | 5,484 |
2,020 | 353,777 |
Thereafter | 544 |
Total | 388,842 |
Credit Agreement | |
Maturity of long-term obligations | |
2,016 | 3,650 |
2,017 | 3,650 |
2,018 | 3,650 |
2,019 | 3,650 |
2,020 | 352,613 |
Total | 367,213 |
Capital leases, due various dates from 2016 to 2021 | |
Minimum Lease Payments | |
2,016 | 4,391 |
2,017 | 3,750 |
2,018 | 2,755 |
2,019 | 1,954 |
2,020 | 1,210 |
Thereafter | 552 |
Total | 14,612 |
Less Interest Payments | |
2,016 | (534) |
2,017 | (358) |
2,018 | (220) |
2,019 | (120) |
2,020 | (46) |
Thereafter | (8) |
Total | (1,286) |
Principal Amount | |
2,016 | 3,857 |
2,017 | 3,392 |
2,018 | 2,535 |
2,019 | 1,834 |
2,020 | 1,164 |
Thereafter | 544 |
Total | 13,326 |
Notes Payable | |
Maturity of long-term obligations | |
2,016 | 4,706 |
2,017 | 3,597 |
Total | $ 8,303 |
OPERATING LEASES (Details)
OPERATING LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Total Future Minimum Lease Payments | |||
2,016 | $ 9,174 | ||
2,017 | 8,533 | ||
2,018 | 7,859 | ||
2,019 | 5,851 | ||
2,020 | 5,020 | ||
Thereafter | 21,074 | ||
Total minimum lease payments | 57,511 | ||
Expense related to operating leases | $ 13,500 | $ 11,400 | $ 12,600 |
EQUITY - General (Details)
EQUITY - General (Details) $ / shares in Units, $ in Thousands | Feb. 25, 2016$ / shares | Feb. 16, 2016USD ($) | Dec. 31, 2015USD ($)$ / shares | Sep. 30, 2015$ / shares | Jun. 30, 2015$ / shares | Mar. 31, 2015$ / shares | Dec. 31, 2014USD ($)$ / shares | Sep. 30, 2014$ / shares | Jun. 30, 2014$ / shares | Mar. 31, 2014$ / shares | Dec. 31, 2013$ / shares | Sep. 30, 2013$ / shares | Jun. 30, 2013$ / shares | Mar. 31, 2013$ / shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($)$ / sharesshares | Sep. 18, 2014shares | Nov. 06, 2013USD ($) | Jun. 01, 2012USD ($) |
Share Repurchases | ||||||||||||||||||||
Authorized amount under stock repurchase program | $ 35,000 | |||||||||||||||||||
Share repurchases | $ 22,881 | |||||||||||||||||||
Dividend | ||||||||||||||||||||
Cash dividends declared per share of common stock | $ / shares | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.09 | $ 0.36 | $ 0.36 | $ 0.36 | ||||
Dividends payable | $ 3,599 | $ 3,376 | $ 3,599 | $ 3,376 | ||||||||||||||||
Dividends payable related to forfeitable dividends | $ 300 | 300 | ||||||||||||||||||
Cash dividends paid | $ 3,300 | 13,239 | 12,793 | $ 12,891 | ||||||||||||||||
Dividends, Common Stock | $ 13,462 | $ 13,026 | $ 12,801 | |||||||||||||||||
Shareholder Rights Agreement | ||||||||||||||||||||
Preferred stock purchase right dividend declared | shares | 1 | |||||||||||||||||||
Credit Agreement | ||||||||||||||||||||
Dividend | ||||||||||||||||||||
Maximum percentage of net income that can be paid as dividends and repurchase securities | 50.00% | |||||||||||||||||||
Net leverage ratio, maximum | 4.25 | 4.25 | ||||||||||||||||||
2012 Program | ||||||||||||||||||||
Share Repurchases | ||||||||||||||||||||
Authorized amount under stock repurchase program | $ 35,000 | |||||||||||||||||||
Share repurchases (in shares) | shares | 1,768,296 | |||||||||||||||||||
Share repurchases | $ 22,900 | |||||||||||||||||||
Weighted average cost of common stock repurchased (in dollars per share) | $ / shares | $ 12.94 | |||||||||||||||||||
2014 Share Repurchase Program | ||||||||||||||||||||
Share Repurchases | ||||||||||||||||||||
Share repurchases (in shares) | shares | 0 | |||||||||||||||||||
Repurchase Shares Satisfy Employee Tax Withholding Obligations | ||||||||||||||||||||
Share Repurchases | ||||||||||||||||||||
Share repurchases (in shares) | shares | 230,021 | 276,032 | 471,248 | |||||||||||||||||
Share repurchases | $ 4,200 | $ 4,000 | $ 6,500 | |||||||||||||||||
Repurchase of Common Stock for Employee Tax Withholding Obligations Shares | shares | 73,442 | 47,058 | 1,143,119 |
EQUITY - AOCI (Details)
EQUITY - AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax | |||
Balance beginning of the period | $ (4,362) | ||
Balance end of the period | (7,949) | $ (4,362) | |
Foreign currency translation adjustments | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax | |||
Balance beginning of the period | (2,952) | (541) | $ (1,432) |
Other comprehensive loss, net of tax | (2,209) | (2,411) | 891 |
Balance end of the period | (5,161) | (2,952) | $ (541) |
Unrealized loss on cash flow hedges | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax | |||
Balance beginning of the period | (1,410) | ||
Other comprehensive loss, net of tax | (1,405) | (1,410) | |
Reclassification adjustments, net of tax | 27 | ||
Balance end of the period | $ (2,788) | $ (1,410) |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Contribution Plan | |||
Plan expense | $ 3.3 | $ 3 | $ 2.5 |
Maximum | |||
Defined Contribution Plan | |||
Employer matching contribution (as a percent) | 6.00% |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets and Liabilities (Details) - Recurring Basis - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Carrying Value | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Acquisition-related contingent consideration | $ 1,116 | |
Total Liabilities | 3,567 | |
Carrying Value | Interest rate cap | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Derivative Asset | 1 | |
Interest rate cap | 1 | |
Carrying Value | Interest rate swap | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Interest rate swap | $ 3,856 | 2,451 |
Significant Other Observable Inputs (Level 2) | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Total Liabilities | 2,451 | |
Significant Other Observable Inputs (Level 2) | Interest rate cap | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Derivative Asset | 1 | |
Interest rate cap | 1 | |
Significant Other Observable Inputs (Level 2) | Interest rate swap | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Interest rate swap | $ 3,856 | 2,451 |
Significant Unobservable Inputs (Level 3) | ||
Assets and liabilities measured and recorded at fair value on a recurring basis | ||
Acquisition-related contingent consideration | 1,116 | |
Total Liabilities | $ 1,116 |
FAIR VALUE MEASUREMENTS - Conti
FAIR VALUE MEASUREMENTS - Contingent Consideration (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2015 | Apr. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
De Novo Legal LLC | |||||
Change in the acquisition-related contingent consideration obligation | |||||
Cash payment made to sellers on settlement of dispute | $ 1,500 | ||||
Contingent consideration | $ 1,500 | ||||
Remaining payments | $ 0 | ||||
De Novo Legal LLC | Fair Value Adjustment To Contingent Consideration | |||||
Change in the acquisition-related contingent consideration obligation | |||||
Contingent consideration | 1,100 | ||||
De Novo Legal LLC | Selling, general and administrative expense | |||||
Change in the acquisition-related contingent consideration obligation | |||||
Contingent consideration | $ 400 | ||||
Minus - 10 | |||||
Change in the acquisition-related contingent consideration obligation | |||||
Contingent consideration liability, discount rate (as a percent) | 25.00% | ||||
Contingent consideration | $ 900 | $ 0 | |||
Non-cash gain on fair value adjustment to contingent consideration | 1,200 | ||||
Equity interest sold | 100.00% | ||||
Remaining payments | 0 | ||||
Contingent consideration | Significant Unobservable Inputs (Level 3) | |||||
Change in the acquisition-related contingent consideration obligation | |||||
Balance at the beginning of period | 1,116 | $ 2,580 | |||
Present value accretion | 103 | 189 | |||
Payments | (37) | (3,728) | |||
Fair value related adjustments | $ (1,182) | 2,075 | |||
Balance at the end of period | $ 1,116 |
INCOME TAXES - General (Details
INCOME TAXES - General (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income (loss) before income taxes | |||
United States | $ (6,331) | $ (20,892) | $ 12,273 |
Foreign | 13,993 | 15,040 | 4,832 |
Total | 7,662 | (5,852) | 17,105 |
Current: | |||
Federal | (8,459) | (6,735) | 9,121 |
State | (187) | (362) | 1,849 |
Foreign | 2,700 | 3,120 | 1,542 |
Total | (5,946) | (3,977) | 12,512 |
Deferred: | |||
Federal | 14,006 | 2,599 | (4,687) |
State | 11,103 | (3,270) | (1,724) |
Foreign | 437 | 133 | (106) |
Total | 25,546 | (538) | (6,517) |
Total income tax expense (benefit) | 19,600 | (4,515) | 5,995 |
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Income (loss) before income taxes | 7,662 | (5,852) | 17,105 |
Consolidated income tax expense (benefit) | $ 19,600 | $ (4,515) | $ 5,995 |
Summary effective tax rate, domestic | 35.00% | 35.00% | 35.00% |
Summary effective tax rate, consolidated | 255.80% | 77.20% | 35.00% |
Income tax expense (benefit) at the statutory rate | $ 2,682 | $ (2,048) | $ 5,987 |
Valuation allowances | 16,794 | 1,095 | 707 |
State income taxes, net of federal tax effect | 654 | (2,796) | (85) |
Foreign income taxes | (1,593) | (2,253) | (863) |
Permanent differences | 1,335 | 1,189 | 797 |
Uncertain tax positions | (133) | (112) | 447 |
Research and development credits | (770) | (513) | (676) |
Nondeductible compensation | (20) | 411 | |
Share-based compensation | 491 | 469 | |
Domestic production activities deduction | (5) | (422) | |
Other | 160 | 48 | 103 |
Deferred tax assets: | |||
U.S. net operating loss carryforwards | 15,175 | 2,305 | |
Foreign net operating loss carryforwards | 767 | 831 | |
Income tax credit carryforwards | 2,969 | 1,274 | |
Share-based compensation | 5,068 | 6,206 | |
Intangible assets | 2,109 | 11,747 | |
Deferred rent | 812 | 426 | |
Accrued liabilities | 10,211 | 4,765 | |
Cash flow hedges | 1,600 | 1,067 | |
Allowance for doubtful accounts | 646 | 1,379 | |
Other | 658 | 195 | |
Valuation allowances | (19,230) | (1,903) | |
Total deferred tax assets | 20,785 | 28,292 | |
Deferred tax liabilities: | |||
Prepaid expenses | (3,837) | (1,875) | |
Goodwill | (47,343) | (42,994) | |
Property and equipment and software development costs | (15,216) | (11,324) | |
Deferred debt discharge income | (1,336) | (1,985) | |
Total deferred tax liabilities | (67,732) | (58,178) | |
Net deferred tax liability | $ (46,947) | (29,886) | |
United Kingdom | |||
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Effective tax rate | 21.00% | ||
United States. | |||
Deferred: | |||
Total income tax expense (benefit) | $ 16,463 | (7,768) | 4,559 |
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Consolidated income tax expense (benefit) | $ 16,463 | $ (7,768) | $ 4,559 |
Effective tax rate | 41.00% | ||
Summary effective tax rate, domestic | (260.00%) | 37.20% | 37.10% |
Foreign | |||
Deferred: | |||
Total income tax expense (benefit) | $ 3,137 | $ 3,253 | $ 1,436 |
Reconciliation of the provision for income taxes at the statutory rate to the provision for income taxes at effective rate | |||
Consolidated income tax expense (benefit) | $ 3,137 | $ 3,253 | $ 1,436 |
Summary effective tax rate, foreign | 22.40% | 21.60% | 29.70% |
INCOME TAXES - Carryforwards (D
INCOME TAXES - Carryforwards (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2009 | |
Deferred debt discharge income included in taxable income | ||||
Valuation allowance against deferred tax assets | $ 17,000 | $ 1,900 | ||
Alternative minimum tax credit carryforward | 500 | |||
Equity balance increase if and when deferred tax assets are realized | 300 | |||
Change in taxes resulting from: | ||||
Total income tax expense (benefit) | 19,600 | (4,515) | $ 5,995 | |
Net deferred tax liability | ||||
Other long-term assets | 89 | 139 | ||
Long-term deferred income tax liability | (47,036) | (30,025) | ||
Net deferred tax liability | (46,947) | (29,886) | ||
Deferred tax liabilities related to goodwill excluded from valuation allowance measurement | 47,343 | 42,994 | ||
Research credits | ||||
Deferred debt discharge income included in taxable income | ||||
Amount of tax credit carryforward | 600 | |||
Federal | ||||
Net operating loss | ||||
Operating loss carryforwards | $ 28,600 | |||
Deferred debt discharge income included in taxable income | ||||
Period of carry forward of tax credit | 20 years | |||
Federal | Research credits | ||||
Deferred debt discharge income included in taxable income | ||||
Amount of tax credit carryforward | $ 1,300 | |||
Period of carry forward of tax credit | 18 years | |||
State | ||||
Net operating loss | ||||
Operating loss carryforwards | 4,700 | |||
Operating loss carryforwards expiration amount | $ 115,789 | |||
Valuation allowance relating to operating loss carryforwards | 200 | |||
Deferred debt discharge income included in taxable income | ||||
Amount of tax credit carryforward | $ 1,500 | $ 1,200 | ||
Period of carry forward of tax credit | 14 years | 13 years | ||
Valuation allowance against deferred tax assets | $ 1,500 | $ 900 | ||
State | Minimum | ||||
Deferred debt discharge income included in taxable income | ||||
Period of carry forward of tax credit | 1 year | |||
State | Maximum | ||||
Deferred debt discharge income included in taxable income | ||||
Period of carry forward of tax credit | 20 years | |||
State | 2016 - 2020 | ||||
Net operating loss | ||||
Operating loss carryforwards expiration amount | $ 2,955 | |||
State | 2021 - 2025 | ||||
Net operating loss | ||||
Operating loss carryforwards expiration amount | 17,906 | |||
State | 2026 - 2030 | ||||
Net operating loss | ||||
Operating loss carryforwards expiration amount | 22,518 | |||
State | 2031 - 2035 | ||||
Net operating loss | ||||
Operating loss carryforwards expiration amount | 72,410 | |||
Foreign | ||||
Net operating loss | ||||
Operating loss carryforwards | 2,900 | 2,300 | ||
Operating loss carryforwards that will fully expire in 2022 | 1,000 | |||
Operating loss carryforwards that will fully expire in 2023 | 400 | 2,000 | ||
Valuation allowance relating to operating loss carryforwards | 700 | 800 | ||
Deferred debt discharge income included in taxable income | ||||
Deferred tax asset resulting from operating loss carryforwards | 800 | |||
Change in taxes resulting from: | ||||
Total income tax expense (benefit) | 3,137 | $ 3,253 | $ 1,436 | |
Encore Discovery Solutions | ||||
Net operating loss | ||||
Deferred debt discharge income | $ 8,900 | |||
Deferred debt discharge income included in taxable income | ||||
2,013 | 1,800 | |||
2,014 | 1,800 | |||
2,015 | 1,800 | |||
2,016 | 1,800 | |||
2,017 | $ 1,800 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME TAXES | |||
Unrecognized tax benefits including penalty and interest | $ 5,900 | $ 6,300 | $ 6,400 |
Tax benefit excluded from the estimated annual effective tax rate | 4,800 | 5,100 | 5,200 |
Increase in unrecognized tax benefits related to Iris | 200 | ||
Activity related to gross unrecognized tax benefits excluding interest and penalties | |||
Unrecognized Tax Benefits at the beginning of the period | 5,120 | 5,326 | 4,639 |
Gross increases for prior year tax positions | 206 | 190 | 243 |
Gross decreases for prior year tax positions | (60) | (53) | |
Gross increase for current year tax positions | 135 | 197 | 530 |
Settlements | (33) | ||
Lapse of statute of limitations | (795) | (533) | |
Unrecognized Tax Benefits at the end of the period | $ 4,666 | $ 5,120 | $ 5,326 |
INCOME TAXES - Tax Contingencie
INCOME TAXES - Tax Contingencies (Details) $ in Millions | Dec. 31, 2015USD ($) |
INCOME TAXES | |
Excess of earnings over the tax basis of investments | $ 35.3 |
INCOME TAXES - Interest and Pen
INCOME TAXES - Interest and Penalties (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME TAXES | |||
Interest and penalties on income tax | $ 0.1 | $ 0.2 | $ 0.2 |
Accrued interest | 1.1 | 1 | |
Accrued penalties | $ 0.2 | $ 0.2 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
EARNINGS PER SHARE | |||||||||||
Net income (loss) | $ 8,750 | $ (19,180) | $ (3,241) | $ 1,733 | $ (630) | $ 5,010 | $ (3,419) | $ (2,298) | $ (11,938) | $ (1,337) | $ 11,110 |
Less: amounts allocated to nonvested shares | (113) | ||||||||||
Basic net income (loss) available to common stockholders | $ (11,938) | $ (1,337) | $ 10,997 | ||||||||
Weighted Average Common Shares Outstanding (Denominator) | |||||||||||
Weighted Average Common Shares Outstanding Basic | 36,584 | 35,512 | 35,434 | ||||||||
Effect of dilutive securities | 868 | ||||||||||
Weighted Average Common Shares Outstanding Diluted | 36,584 | 35,512 | 36,302 | ||||||||
Net loss per common share | |||||||||||
Basic net income (loss) per common share | $ 0.24 | $ (0.52) | $ (0.09) | $ 0.05 | $ (0.02) | $ 0.14 | $ (0.10) | $ (0.07) | $ (0.33) | $ (0.04) | $ 0.31 |
Diluted net income (loss) per common share | $ 0.24 | $ (0.52) | $ (0.09) | $ 0.05 | $ (0.02) | $ 0.14 | $ (0.10) | $ (0.07) | $ (0.33) | $ (0.04) | $ 0.30 |
Antidilutive securities excluded from computation of diluted net income per share | |||||||||||
Stock options and nonvested shares excluded as their inclusion would be anti-dilutive | 2,700 | 3,400 | 2,000 |
SHARE-BASED COMPENSATION - Expe
SHARE-BASED COMPENSATION - Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
SHARE-BASED COMPENSATION | |||
Total share-based compensation expense | $ 13,748 | $ 13,098 | $ 10,008 |
Income tax benefit | 5,700 | 5,500 | 4,100 |
Direct cost of services | |||
SHARE-BASED COMPENSATION | |||
Total share-based compensation expense | 2,090 | 2,359 | 660 |
Selling, general and administrative expense | |||
SHARE-BASED COMPENSATION | |||
Total share-based compensation expense | $ 11,658 | $ 10,739 | $ 9,348 |
SHARE-BASED COMPENSATION - Gene
SHARE-BASED COMPENSATION - General (Details) $ / shares in Units, $ in Thousands | Feb. 22, 2016shares | Feb. 28, 2015shares | Jan. 31, 2015$ / sharesshares | Jan. 31, 2014shares | Feb. 28, 2013shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)item$ / sharesshares | Dec. 31, 2013USD ($)$ / sharesshares | Feb. 28, 2018shares | Feb. 28, 2017shares | Sep. 03, 2015shares |
SHARE-BASED COMPENSATION | |||||||||||
Share-based compensation expense | $ | $ 13,748 | $ 13,098 | $ 10,008 | ||||||||
Accrued compensation | $ | $ 23,977 | $ 18,673 | |||||||||
Stock options | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Vesting period | 7 years | ||||||||||
Granted (in shares) | 250,000 | 0 | |||||||||
Outstanding, end of period (in dollars per share) | $ / shares | $ 13.98 | $ 13.66 | |||||||||
Unrecognized compensation cost related to outstanding, unvested stock options and restricted stock | $ | $ 1,900 | ||||||||||
Weighted average recognition period of unrecognized compensation cost | 2 years 6 months | ||||||||||
Expiration period of stock options | 10 years | ||||||||||
Weighted-average assumptions used and the weighted-average fair value per option granted | |||||||||||
Expected life of stock option | 7 years | 7 years | |||||||||
Expected volatility (as a percent) | 37.00% | 36.00% | |||||||||
Risk-free interest rate (as a percent) | 1.90% | 2.10% | |||||||||
Dividend yield (as a percent) | 2.30% | 2.50% | |||||||||
Weighted average grant-date fair value (in dollars per share) | $ / shares | $ 5.20 | $ 4.33 | |||||||||
Shares | |||||||||||
Outstanding, beginning of period (in shares) | 2,351,000 | 2,351,000 | |||||||||
Granted (in shares) | 250,000 | 0 | |||||||||
Exercised (in shares) | (382,000) | ||||||||||
Forfeited and expired (in shares) | (386,000) | ||||||||||
Outstanding, end of period (in shares) | 1,833,000 | 2,351,000 | |||||||||
Number of shares expected to vest | 1,790,000 | ||||||||||
Options exercisable, end of period (in shares) | 1,419,000 | ||||||||||
Weighted Average Exercise Price | |||||||||||
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 13.66 | $ 13.66 | |||||||||
Granted (in dollars per share) | $ / shares | 16.55 | ||||||||||
Exercised (in dollars per share) | $ / shares | 12.80 | ||||||||||
Forfeited and expired (in dollars per share) | $ / shares | 14.85 | ||||||||||
Outstanding, end of period (in dollars per share) | $ / shares | 13.98 | $ 13.66 | |||||||||
Options vested and expected to vest, end of period (in dollars per share) | $ / shares | 13.97 | ||||||||||
Options exercisable, end of period (in dollars per share) | $ / shares | $ 13.90 | ||||||||||
Weighted Average Contractual Term | |||||||||||
Outstanding, end of period | 3 years 8 months 12 days | ||||||||||
Options vested and expected to vest, end of period | 3 years 6 months | ||||||||||
Options exercisable, end of period | 2 years 4 months 24 days | ||||||||||
Aggregate Intrinsic Value | |||||||||||
Outstanding, end of period | $ | $ 1,298 | ||||||||||
Options vested and expected to vest, end of period | $ | 1,275 | ||||||||||
Options exercisable, end of period | $ | $ 1,062 | ||||||||||
Other restricted stock awards | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Number of shares vested | 50,000 | ||||||||||
Shares outstanding | 160,994 | 377,500 | |||||||||
Restricted stock granted (in shares) | 475,863 | 659,299 | |||||||||
Other restricted stock awards | Maximum | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Vesting period | 3 years | ||||||||||
Other restricted stock awards | Minimum | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Vesting period | 1 year | ||||||||||
Other restricted stock awards | Year ended December 31, 2013 grants | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Granted (in shares) | 197,600 | ||||||||||
Shares | |||||||||||
Granted (in shares) | 197,600 | ||||||||||
Other restricted stock awards | Vest upon issuance | Year ended December 31, 2013 grants | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Number of shares vested | 164,100 | ||||||||||
Other restricted stock awards | Vest in one year | Year ended December 31, 2013 grants | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Number of shares vested | 33,500 | ||||||||||
Vesting period | 1 year | ||||||||||
Other restricted stock awards | Vest one to three years | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Shares outstanding | 110,994 | ||||||||||
Nonvested share awards | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Restricted stock granted (in shares) | 816,000 | ||||||||||
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 17.94 | $ 15.05 | $ 12.90 | ||||||||
Remaining restricted stock (in shares) | 709,000 | 578,000 | |||||||||
Unrecognized compensation cost related to outstanding, unvested stock options and restricted stock | $ | $ 7,200 | ||||||||||
Weighted average recognition period of unrecognized compensation cost | 1 year 8 months 12 days | ||||||||||
Shares | |||||||||||
Vested (in shares) | (645,000) | ||||||||||
2004 Incentive Plan | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Equity awards (in shares) | 7,500,000 | ||||||||||
Number of remaining shares available for issuance under current plan | 500,000 | ||||||||||
Strategic Executive Incentive Plan | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Granted (in shares) | 330,000 | ||||||||||
Shares | |||||||||||
Granted (in shares) | 330,000 | ||||||||||
Strategic Executive Incentive Plan | 2014 Performance-based RSAs | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Number of shares vested | 225,000 | ||||||||||
Restricted stock granted (in shares) | 450,000 | ||||||||||
Forfeited in the period | 225,000 | ||||||||||
Number of executives who forfeited share awards in conjunction with resignation | item | 2 | ||||||||||
2015 Inducement Plan | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Number of remaining shares available for issuance under current plan | 200,000 | ||||||||||
Stock awards issued during period | 0 | ||||||||||
Executive performance-based annual incentive compensation awards | 2015 Performance-based RSAs | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Number of shares vested | 140,000 | ||||||||||
Restricted stock granted (in shares) | 320,000 | ||||||||||
Executive performance-based annual incentive compensation awards | 2015 Performance-based RSAs | Vest one to three years | |||||||||||
Shares | |||||||||||
Number of shares expected to vest | 0 | 180,000 | |||||||||
Management performance based annual incentive compensation awards | 2015 Performance-based RSAs | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Number of shares vested | 10,000 | ||||||||||
Restricted stock granted (in shares) | 20,000 | ||||||||||
Forfeited in the period | 10,000 | ||||||||||
Executive officer and employee incentive compensation awards | Vest one to three years | Maximum | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Vesting period | 3 years | ||||||||||
Executive officer and employee incentive compensation awards | Vest one to three years | Minimum | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Vesting period | 1 year | ||||||||||
Executive officer and employee incentive compensation awards | Other restricted stock awards | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Granted (in shares) | 314,869 | ||||||||||
Shares | |||||||||||
Granted (in shares) | 314,869 | ||||||||||
Executive officer and employee incentive compensation awards | 2015 Performance-based RSAs | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Share-based compensation expense | $ | $ 7,700 | ||||||||||
Executive officer and employee incentive compensation awards for fiscal 2013 and 2014 | Other restricted stock awards | |||||||||||
SHARE-BASED COMPENSATION | |||||||||||
Granted (in shares) | 281,799 | ||||||||||
Shares | |||||||||||
Granted (in shares) | 281,799 |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Option Exercises (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Exercises of Stock Options | |||
Intrinsic value of stock options exercised | $ 877 | $ 3,759 | $ 8,658 |
Cash received from option exercises | 3,886 | 12,503 | 3,005 |
Tax benefit realized from options exercised during the annual period | $ 364 | $ 1,590 | $ 6,689 |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share Awards (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Other restricted stock awards | |||
Shares | |||
Granted (in shares) | 475,863 | 659,299 | |
Other restricted stock awards | Year ended December 31, 2013 grants | Vest in one year | |||
Weighted Average Grant Date Fair Value | |||
Vesting period | 1 year | ||
Nonvested share awards | |||
Shares | |||
Nonvested, beginning of period (in shares) | 578,000 | ||
Granted (in shares) | 816,000 | ||
Vested (in shares) | (645,000) | ||
Forfeited/Canceled | (40,000) | ||
Outstanding, end of period (in shares) | 709,000 | 578,000 | |
Unrecognized compensation cost related to outstanding, unvested stock options and restricted stock | $ 7.2 | ||
Weighted Average Grant Date Fair Value | |||
Nonvested, beginning of period (in dollars per shares) | $ 15.23 | ||
Weighted-average grant date price (in dollars per share) | 17.94 | $ 15.05 | $ 12.90 |
Vested (in dollars per shares) | 16.68 | ||
Forfeited/Canceled | 15.90 | ||
Outstanding, end of period (in dollars per shares) | $ 17 | $ 15.23 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 8 months 12 days |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | Apr. 30, 2015 | Apr. 01, 2014 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Acquisitions | |||||||||||||
Post closing tax benefit | $ 23,000 | ||||||||||||
Cash consideration in escrow deposit | $ 13,000 | 13,000 | |||||||||||
Intangible assets: | |||||||||||||
Goodwill | 477,479 | $ 404,187 | 477,479 | $ 404,187 | $ 404,302 | ||||||||
Capital lease obligations | 9,061 | 9,061 | |||||||||||
Pro forma financial information | |||||||||||||
Revenue | 144,632 | $ 142,535 | $ 138,010 | $ 119,028 | 115,137 | $ 111,006 | $ 125,056 | $ 123,271 | 544,205 | 474,470 | 482,083 | ||
Net income (loss) | 8,750 | $ (19,180) | $ (3,241) | $ 1,733 | $ (630) | $ 5,010 | $ (3,419) | $ (2,298) | (11,938) | (1,337) | 11,110 | ||
Debt issuance costs related to Iris in interest expense | 20,445 | 16,674 | $ 12,130 | ||||||||||
Customer relationships | |||||||||||||
Intangible assets: | |||||||||||||
Useful life | 8 years | ||||||||||||
Technology | |||||||||||||
Intangible assets: | |||||||||||||
Useful life | 3 years | ||||||||||||
Trade names | |||||||||||||
Intangible assets: | |||||||||||||
Useful life | 10 years | ||||||||||||
Non-compete agreements | Minimum | |||||||||||||
Intangible assets: | |||||||||||||
Useful life | 2 years | ||||||||||||
Non-compete agreements | Maximum | |||||||||||||
Intangible assets: | |||||||||||||
Useful life | 5 years | ||||||||||||
Iris Data Services Inc | |||||||||||||
Acquisitions | |||||||||||||
Cash consideration | $ 124,700 | ||||||||||||
Total purchase price | 133,800 | ||||||||||||
Cash consideration paid to seller | 68,600 | ||||||||||||
Cash consideration paid to plan participants | 55,200 | ||||||||||||
Cash consideration paid to plan participants and post-closing working capital adjustment | 900 | ||||||||||||
Portion of cash consideration payable to plan participants | 600 | 600 | |||||||||||
Post-closing working capital settlement paid to the seller | $ 300 | 300 | |||||||||||
Goodwill deductible for income tax purposes | 5,300 | ||||||||||||
Intangible assets: | |||||||||||||
Acquired identifiable intangible assets | 34,694 | ||||||||||||
Goodwill | 73,676 | ||||||||||||
Cash and cash equivalents | 197 | ||||||||||||
Accounts receivable | 15,208 | ||||||||||||
Other current assets | 1,551 | ||||||||||||
Deferred income tax assets | 8,484 | ||||||||||||
Property and equipment | 10,642 | ||||||||||||
Other long-term assets | 246 | ||||||||||||
Intangible assets | 34,694 | ||||||||||||
Total assets acquired | 144,698 | ||||||||||||
Accounts payable | 4,407 | ||||||||||||
Accrued liabilities | 4,837 | ||||||||||||
Deferred revenue | 1,689 | ||||||||||||
Capital lease obligations | 9,061 | ||||||||||||
Total liabilities assumed | 19,994 | ||||||||||||
Net assets acquired | 124,704 | ||||||||||||
Fair value of intangible assets acquired | 34,694 | ||||||||||||
Pro forma financial information | |||||||||||||
Revenue | 29,000 | ||||||||||||
Net income (loss) | (7,100) | ||||||||||||
Transaction costs | 2,500 | ||||||||||||
Debt issuance costs related to Iris | 1,000 | ||||||||||||
Debt issuance costs related to Iris in interest expense | 700 | ||||||||||||
Iris Data Services Inc | Original Allocation | |||||||||||||
Intangible assets: | |||||||||||||
Goodwill | 74,852 | ||||||||||||
Cash and cash equivalents | 197 | ||||||||||||
Accounts receivable | 15,623 | ||||||||||||
Other current assets | 2,517 | ||||||||||||
Deferred income tax assets | 21,041 | ||||||||||||
Property and equipment | 10,642 | ||||||||||||
Other long-term assets | 246 | ||||||||||||
Intangible assets | 34,694 | ||||||||||||
Total assets acquired | 159,812 | ||||||||||||
Accounts payable | 4,407 | ||||||||||||
Accrued liabilities | 4,868 | ||||||||||||
Deferred revenue | 1,580 | ||||||||||||
Deferred income tax liabilities | 15,149 | ||||||||||||
Capital lease obligations | 9,061 | ||||||||||||
Total liabilities assumed | 35,065 | ||||||||||||
Net assets acquired | 124,747 | ||||||||||||
Iris Data Services Inc | Allocation Adjustments | |||||||||||||
Intangible assets: | |||||||||||||
Goodwill | (1,176) | ||||||||||||
Accounts receivable | (415) | ||||||||||||
Other current assets | (966) | ||||||||||||
Deferred income tax assets | (12,557) | ||||||||||||
Total assets acquired | (15,114) | ||||||||||||
Accrued liabilities | (31) | ||||||||||||
Deferred revenue | 109 | ||||||||||||
Deferred income tax liabilities | (15,149) | ||||||||||||
Total liabilities assumed | (15,071) | ||||||||||||
Net assets acquired | (43) | ||||||||||||
Iris Data Services Inc | Customer relationships | |||||||||||||
Intangible assets: | |||||||||||||
Acquired identifiable intangible assets | 15,400 | ||||||||||||
Fair value of intangible assets acquired | 15,400 | ||||||||||||
Iris Data Services Inc | Technology | |||||||||||||
Intangible assets: | |||||||||||||
Acquired identifiable intangible assets | 8,400 | ||||||||||||
Fair value of intangible assets acquired | 8,400 | ||||||||||||
Iris Data Services Inc | Trade names | |||||||||||||
Intangible assets: | |||||||||||||
Acquired identifiable intangible assets | 7,000 | ||||||||||||
Fair value of intangible assets acquired | 7,000 | ||||||||||||
Iris Data Services Inc | Non-compete agreements | |||||||||||||
Intangible assets: | |||||||||||||
Acquired identifiable intangible assets | 3,894 | ||||||||||||
Fair value of intangible assets acquired | $ 3,894 | ||||||||||||
EPIQ And IRIS Data Services Inc | |||||||||||||
Pro forma financial information | |||||||||||||
Revenue | 561,038 | 513,277 | |||||||||||
Net income (loss) | $ (13,649) | $ (10,230) | |||||||||||
Minus - 10 | |||||||||||||
Acquisitions | |||||||||||||
Cash consideration | $ 302 | ||||||||||||
Net working capital liability | 17 | ||||||||||||
Deferred cash consideration | 43 | ||||||||||||
Fair value of contingent consideration | 933 | ||||||||||||
Total purchase price | 1,295 | ||||||||||||
Intangible assets: | |||||||||||||
Acquired identifiable intangible assets | 1,142 | ||||||||||||
Goodwill | 153 | ||||||||||||
Net assets acquired | 1,295 | ||||||||||||
Fair value of intangible assets acquired | $ 1,142 |
SEGMENT INFORMATION - General (
SEGMENT INFORMATION - General (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)segmentitem | Dec. 31, 2013USD ($)item | |
Segment information | |||||||||||
Number of reporting segments | segment | 2 | ||||||||||
Revenues: | |||||||||||
Operating revenue | $ 136,299 | $ 131,325 | $ 130,557 | $ 107,755 | $ 108,492 | $ 103,955 | $ 115,451 | $ 116,220 | $ 505,936 | $ 444,118 | $ 438,690 |
Reimbursable expenses | 38,269 | 30,352 | 43,393 | ||||||||
Total revenue | $ 144,632 | $ 142,535 | $ 138,010 | $ 119,028 | $ 115,137 | $ 111,006 | $ 125,056 | $ 123,271 | 544,205 | 474,470 | 482,083 |
Segment performance measure | $ 149,072 | $ 137,175 | $ 138,409 | ||||||||
As a percentage of segment operating revenue | 29.00% | 31.00% | 32.00% | ||||||||
Consolidated revenue | |||||||||||
Significant Client and Concentration Of Credit Risk | |||||||||||
Number of significant clients | item | 0 | 0 | 0 | ||||||||
Consolidated revenue | Minimum | |||||||||||
Significant Client and Concentration Of Credit Risk | |||||||||||
Percentage of concentration of credit risk | 10.00% | 10.00% | 10.00% | ||||||||
Consolidated accounts receivable | |||||||||||
Significant Client and Concentration Of Credit Risk | |||||||||||
Number of significant clients | item | 0 | 0 | 0 | ||||||||
Consolidated accounts receivable | Minimum | |||||||||||
Significant Client and Concentration Of Credit Risk | |||||||||||
Percentage of concentration of credit risk | 10.00% | 10.00% | 10.00% | ||||||||
Technology | |||||||||||
Revenues: | |||||||||||
Operating revenue | $ 345,613 | $ 297,679 | $ 284,929 | ||||||||
Intersegment revenue | $ 1,594 | $ 2,045 | $ 384 | ||||||||
As a percentage of segment operating revenue | 28.00% | 28.00% | 31.00% | ||||||||
Bankruptcy and Settlement Administration Segment | |||||||||||
Revenues: | |||||||||||
Operating revenue | $ 160,323 | $ 146,439 | $ 153,761 | ||||||||
As a percentage of segment operating revenue | 34.00% | 36.00% | 32.00% | ||||||||
Operating segment | |||||||||||
Revenues: | |||||||||||
Direct costs, selling, general and administrative expenses | $ 395,133 | $ 337,295 | $ 343,674 | ||||||||
Operating segment | Technology | |||||||||||
Revenues: | |||||||||||
Operating revenue | 347,207 | 299,724 | 285,313 | ||||||||
Reimbursable expenses | 2,044 | 2,540 | 2,488 | ||||||||
Total revenue | 349,251 | 302,264 | 287,801 | ||||||||
Direct costs, selling, general and administrative expenses | 254,200 | 218,255 | 198,462 | ||||||||
Segment performance measure | 95,051 | 84,009 | 89,339 | ||||||||
Operating segment | Bankruptcy and Settlement Administration Segment | |||||||||||
Revenues: | |||||||||||
Operating revenue | 160,323 | 146,439 | 153,761 | ||||||||
Reimbursable expenses | 36,225 | 27,812 | 40,905 | ||||||||
Total revenue | 196,548 | 174,251 | 194,666 | ||||||||
Direct costs, selling, general and administrative expenses | 142,527 | 121,085 | 145,596 | ||||||||
Segment performance measure | 54,021 | 53,166 | 49,070 | ||||||||
Eliminations | |||||||||||
Revenues: | |||||||||||
Operating revenue | (1,594) | (2,045) | (384) | ||||||||
Intersegment revenue | (1,594) | (2,045) | (384) | ||||||||
Total revenue | (1,594) | (2,045) | (384) | ||||||||
Direct costs, selling, general and administrative expenses | $ (1,594) | $ (2,045) | $ (384) | ||||||||
As a percentage of segment operating revenue | 0.00% |
SEGMENT INFORMATION - Segment P
SEGMENT INFORMATION - Segment Performance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of our segment performance measure to income (loss) before income taxes | |||
Segment performance measure | $ 149,072 | $ 137,175 | $ 138,409 |
Unallocated expenses | (45,821) | (62,557) | (47,587) |
Share-based compensation expense | (13,748) | (13,098) | (10,008) |
Depreciation and software and leasehold amortization | (37,810) | (36,042) | (30,971) |
Amortization of identifiable intangible assets | (18,347) | (12,655) | (18,834) |
Intangible asset impairment expense | (1,162) | ||
Fair value adjustment to contingent consideration | 1,182 | (1,142) | (2,580) |
Other operating income (expense) | (5,291) | (880) | 791 |
Operating income | 28,075 | 10,801 | 29,220 |
Interest expense, net | (20,413) | (16,653) | (12,115) |
Income (loss) before income taxes | $ 7,662 | $ (5,852) | $ 17,105 |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Total assets | $ 823,897 | $ 727,924 |
Unallocated and corporate | ||
Assets | ||
Total assets | 82,064 | 99,923 |
Technology | ||
Assets | ||
Total assets | 465,736 | 341,764 |
Bankruptcy and Settlement Administration Segment | ||
Assets | ||
Total assets | $ 276,097 | $ 286,237 |
SEGMENT INFORMATION - Capital E
SEGMENT INFORMATION - Capital Expenditures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Capital Expenditures | |||
Total capital expenditures | $ 29,105 | $ 36,039 | $ 40,707 |
Excluded capital expenditures financed under long-term obligations | 6,500 | 4,900 | 7,900 |
Technology | |||
Capital Expenditures | |||
Total capital expenditures | 11,372 | 15,477 | 22,234 |
Bankruptcy and Settlement Administration Segment | |||
Capital Expenditures | |||
Total capital expenditures | 1,266 | 2,596 | 3,161 |
Unallocated and corporate | |||
Capital Expenditures | |||
Total capital expenditures | $ 16,467 | $ 17,966 | $ 15,312 |
SEGMENT INFORMATION - Revenue a
SEGMENT INFORMATION - Revenue and Long-Lived Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | $ 544,205 | $ 474,470 | $ 482,083 |
Long-lived assets | 93,686 | 85,292 | |
United States | |||
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | 465,646 | 410,768 | 431,615 |
Long-lived assets | 84,137 | 78,921 | |
United Kingdom | |||
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | 60,514 | 49,710 | 45,962 |
Other countries | |||
Revenue and long-lived assets excluding intangible assets, by geographical area | |||
Revenue | 18,045 | 13,992 | $ 4,506 |
Long-lived assets | $ 9,549 | $ 6,371 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Nov. 01, 2014 | |
Independent Director To Board of Directors | ||
Related Party Transaction | ||
Maximum reimbursement of out-of-pocket costs | $ 237,890 | |
Additional payments due and payable | $ 0 | |
Senior Vice President Corporate Relations And Business Development | ||
Related Party Transaction | ||
Total compensation | $ 1,000,000 |
SUPPLEMENTAL QUARTERLY FINANC75
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (Unaudited). | |||||||||||
Operating revenue | $ 136,299 | $ 131,325 | $ 130,557 | $ 107,755 | $ 108,492 | $ 103,955 | $ 115,451 | $ 116,220 | $ 505,936 | $ 444,118 | $ 438,690 |
Total revenue | 144,632 | 142,535 | 138,010 | 119,028 | 115,137 | 111,006 | 125,056 | 123,271 | 544,205 | 474,470 | 482,083 |
Gross profit | 68,308 | 63,562 | 59,091 | 54,055 | 50,546 | 49,725 | 51,970 | 53,240 | 245,016 | 205,481 | |
Net income (loss) | $ 8,750 | $ (19,180) | $ (3,241) | $ 1,733 | $ (630) | $ 5,010 | $ (3,419) | $ (2,298) | $ (11,938) | $ (1,337) | $ 11,110 |
Basic (in dollars per share) | $ 0.24 | $ (0.52) | $ (0.09) | $ 0.05 | $ (0.02) | $ 0.14 | $ (0.10) | $ (0.07) | $ (0.33) | $ (0.04) | $ 0.31 |
Diluted (in dollars per share) | $ 0.24 | $ (0.52) | $ (0.09) | $ 0.05 | $ (0.02) | $ 0.14 | $ (0.10) | $ (0.07) | $ (0.33) | $ (0.04) | $ 0.30 |
SCHEDULE II VALUATION AND QUA76
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Allowance for doubtful receivables | |||
VALUATION AND QUALIFYING ACCOUNTS | |||
Balance at the beginning of the period | $ 3,986 | $ 4,379 | $ 4,825 |
Additions, Charged to costs and expenses | (158) | 3,552 | 2,411 |
Deductions from reserves | (2,840) | (3,945) | (2,857) |
Balance at the end of the period | 988 | 3,986 | 4,379 |
Deferred tax valuation allowance | |||
VALUATION AND QUALIFYING ACCOUNTS | |||
Balance at the beginning of the period | 1,903 | 808 | 101 |
Additions, Charged to costs and expenses | 17,119 | 1,127 | 776 |
Additions, Charged to other accounts | 533 | ||
Deductions from reserves | (325) | (32) | (69) |
Balance at the end of the period | $ 19,230 | $ 1,903 | $ 808 |